Selection Ordered,

That Mr Geoffrey Clifton-Brown be discharged from the Committee of Selection and Mr Andrew Robathan be added to the Committee.—[Mr. Watts.]

Richard Burden: Does my right hon. Friend accept that this is an important question because house building is important? Is he aware that, for instance, in Birmingham many of the cases that are brought to my advice surgeries involve people who are having difficulty in finding a home? I do not have great confidence in Birmingham's handling of homelessness, but there is an urgent need to increase not only house building but the availability of affordable houses for rent as well as purchase.

David Miliband: I agree completely with the hon. Gentleman that we need decent communities as well as decent housing. That is why we are putting so much stress on building a strong economy. We do not control and own shops ourselves—my party has moved on from that. We are committed to transport and other areas of infrastructure that are essential if we are to build the decent communities that discussing.

David Miliband: The sustainability appraisals that are at the heart of the environmental work of the ODPM are central to such development. I should have thought that the hon. Lady welcomed the new guidance issued by my hon. Friend the Minister for Housing and Planning, which shows a 40 per cent. increase in the energy efficiency of all new housing.

Phil Woolas: I suspect that the hon. Gentleman would have complained whatever the settlement had been, as indeed he has for the past eight years. I can tell the House that over the 10 years to 2007–08 Worcestershire county council will have had an average increase in formula grant of some 4.5 per cent. per year—significantly above the level of inflation.

Charles Kennedy: In welcoming precisely what the Prime Minister has just said, does he not therefore acknowledge that our country is surely under a legal and moral obligation to investigate why flights are being allowed to pass through our country for rendition purposes? Full inquiries are now taking place in Italy, Spain, Germany and Canada? Why are they not taking place in the United Kingdom?

Tony Blair: Because I have one or two other things to do at the moment. I have to say that I do not in any shape or form regret having supported the action we took. Today and this week is a particularly good time to remind ourselves that this week there will be the first ever democratic election in Iraq in which its people will be able to choose their Government for the first time ever. Alongside our alliance with the United States, that is something that I am very proud of.

Tony Blair: I think that my right hon. Friend the Foreign Secretary has gone through these issues in considerable detail the other day and, indeed, again yesterday, and I am sure that he will continue to do so. We have set out the position very clearly in respect of this country, and American Secretary of State Condi Rice has set out the position clearly in respect of the United States. Let me emphasise again that we do not support any illegal activity or, more particularly, the torture of people in detention. This country has never supported that and never will.

Mark Hoban: I beg to move,
	That leave be given to bring in a Bill to require local authorities and the Government to agree on the infrastructure to be provided for large scale housing developments; and to determine the allocation of costs in advance of the commencement of building work.
	The general practitioner's surgery in Whiteley in my constituency is still housed in a portakabin. The primary school serving that community is too small, so five- and six-year-olds turned away from it are bussed to another school on the other side of a busy motorway junction. There is only one road in and out of Whiteley.
	Residents living in the 3,000 homes in Whiteley see for themselves what happens when large-scale housing development takes place without adequate infrastructure. Thankfully, a new GP's surgery and a one-form-entry primary school will be built shortly, but more needs to be done to tackle the community's traffic problems.
	The quality of life for Whiteley residents would be much better if the infrastructure issues had been tackled up front, rather than on a piecemeal basis. After what has happened in Whiteley, it is clear to me that we cannot embark on large-scale building without looking again at how infrastructure development is provided.
	In addition, we need to address the concerns of residents, who are anxious that existing services cannot cope with the demands and pressures that come from large-scale house building. When faced with development, it is a natural reaction for people to look at the congestion on their roads, at the queues at their GPs' surgeries and at the problems of getting their children into local schools, and to challenge those plans. They also start to question the willingness of the Government to pay their share of the bill for tackling some of those issues.
	In south Hampshire, one of the challenges that we face relates to the transport infrastructure. The main route that links Portsmouth and Southampton—the M27—is struggling with increased demand. The A32 between Fareham and Gosport is already heavily congested. Hampshire county council and Portsmouth city council worked together to design a light rapid transit system to link Fareham, Gosport and Portsmouth, to tackle the growing traffic problems that arise from existing and planned development. Two weeks ago, the Government rejected those plans as being too expensive, but they did not say that fewer houses should be built or that development plans should be put on hold until an alternative transport solution is agreed.
	The rejection of the rapid transit system is illustrative—as, indeed, is the delay in getting an extra primary school for Whiteley—of the problems of failing to tackle the infrastructure needs of development at the outset, rather than waiting until a problem emerges to tackle. If the resolution of the issues is delayed, developers' contributions run out, even if they were ever adequate to tackle the infrastructure needs, and other priorities for expenditure become more pressing.
	We need to learn from those experiences, when looking at the plans that are being put together at the moment by regional assemblies, and to take a fresh look at infrastructure provision and its funding. If we are to meet the needs of new residents and address the concerns of local people, we need to tackle infrastructure in a new way. We cannot simply allow decisions about infrastructure to be taken once houses are built.
	We can forecast what issues will arise from large-scale housing development, and we should plan how to tackle them now, rather than simply waiting for them to happen and trying to find a solution then. By infrastructure, I do not simply mean the estate roads around new developments and shops, but the major infrastructure investment that is needed to fund large-scale development in areas such as south Hampshire, where the plan is to build 80,000 houses over 20 years, 20,000 of which will be in two strategic development areas, one of which is in my constituency.
	If we are to proceed with development on that scale in Hampshire and on a greater scale in the Thames Gateway, Buckinghamshire, Bedford, Essex, Kent, Hertfordshire, Milton Keynes, Northamptonshire and elsewhere, there must be a serious commitment to infrastructure investment.
	My Bill proposes three steps to tackle the infrastructure problems. The Government and the local authority should work together to identify the infrastructure needs related to large-scale housing development. Those needs should be costed. Agreement should be reached about who foots the bill before development can start. Those steps need to be completed, not when it is too late—not when schools are overcrowded, roads are clogged up and water and drainage systems are overloaded—but before work starts, so that local authorities know what support is there and local people understand what the solutions to those issues will be, so that everyone involved in the development knows what their share of the bill is.
	The partnership for urban south Hampshire has already started to assess the infrastructure needs and costs associated with the 80,000 new homes that are planned for the area and recognises, too, the need for measures to tackle the existing infrastructure deficit. It has estimated that the cost of tackling the existing infrastructure problems and meeting future needs that relate to transport alone is £1.6 billion, before taking into account the other needs of those new developments. It estimates that new primary schools will cost about £80 million and that secondary schools will cost a similar amount.
	We will need one GP per 1,800 to 2,500 people. The capital cost associated with a new surgery is about £500,000 per GP. We will need new primary care facilities, enhanced water supplies, new or extended sewage treatment services and community centres. The list is long and is not exclusive to south Hampshire—other areas will need the same facilities—but the crucial issue, once the level of need is identified, is who should pay for it?
	The partnership for urban south Hampshire estimates that each house in the strategic development area will generate developers' contributions of £10,000. So an SDA of the size planned for Fareham will produce £100 million. That sounds a lot, but let us remember that a secondary school can cost about £20 million, so it will not take too long for those contributions to become exhausted. So the cost of infrastructure must be met from elsewhere—whether from council tax payers in the area or from taxpayers.
	The Office of the Deputy Prime Minister has recognised the cost of infrastructure and has set up the community infrastructure fund, but there is only £200 million in that pot—not enough for south Hampshire, let alone areas elsewhere in the country. The position is complicated by the allocation of resources across government. Will the Department for Transport be prepared to pay its share of the bill for road, rail and public transport improvements? Our experience of the rapid transit system is that, while one arm of the Government—the Office of the Deputy Prime Minister—is urging us to build more houses, another arm is not prepared to meet the cost of tackling the traffic congestion that housing development has created.
	If the Government want new houses built, priorities need to be realigned across existing Departments, so that funds are available in the Department for Education and Skills, the Department of Health and the Department for Transport to meet the cost of infrastructure provision. This is not a plea for more money to be spent, but an argument that existing resources be directed at tackling the issues that will arise from housing development. I hope that the cross-cutting review announced in the pre-Budget report will help in the provision of infrastructure in the areas most affected by new developments.
	The essential lock in the process is the requirement that the needs are assessed and agreed, and that before work starts the Government and local authorities decide who picks up the bill. As the people of Whiteley know, it is all too easy to put off those decisions until the housing is built. Other priorities become more pressing and urgent, and it is all the harder to tackle existing problems.
	If the Government want more houses to be built, they need to play their part by ensuring that the money is available to provide the roads, schools, public transport and GP surgeries that an expanding population needs. If they are not prepared to meet their share of the bill, they should not be forcing councils to allow more and more houses to be built, putting a greater and greater strain on an infrastructure originally designed to meet the needs of a much smaller population.
	I ask Members on both sides of the House to recognise the important issues that arise from housing development and to see the Bill and the principles it sets out for reaching an agreement on infrastructure needs and costs and payment before work starts as an essential way of guaranteeing for our constituents a means of securing the services that they need. I commend the Bill to the House.
	Question put and agreed to.
	Bill ordered to be brought in by Mr. Mark Hoban, Mr. Mark Prisk, Mr. David Lidington, Andrew Selous, Mr. Brian Binley, Mr. Mark Francois, Mrs. Maria Miller, Mr. Mark Lancaster, Mr. David Gauke and Peter Viggers.

Jack Straw: Ultimately, the judgment on whether Bulgaria is fully ready for accession will take place at the end of this year or on 1 January 2007, or subsequently. It is a judgement that will have to be made by the European Union as a whole on the basis of recommendations by the Commission. The Commission has raised reservations about the quality of Bulgaria's justice system. My hon. Friend spoke powerfully during the Report stage of the European Union (Accessions) Bill of her concerns about Bulgaria's justice system, as illustrated, in her view, by the treatment of Michael Shields. As my right hon. Friend the Minister for Europe told my hon. Friend, we are making, and will continue to make, strong representations to the Government of Bulgaria. I have done so myself, both to the Foreign Minister and to the Prime Minister, and I stand ready to do so again.
	We have actively pushed enlargement since taking office in 1997. To the great credit of the Opposition, it was the previous Conservative Administration who prodded and prompted the EU to enter into association agreements with each of the eastern European applicant states to prepare them for membership. In 1995, the then Prime Minister, John Major, described enlargement as
	"the most important task facing the European Union".—[Official Report, 18 December 1995; Vol. 268, c. 1222.]
	Two years later, the right hon. Member for Richmond, Yorks, when Leader of the Opposition, promised the Government his "full support" for this "long-standing", "British objective", which has been regularly repeated from the Opposition Front Bench ever since.
	More than that, the Conservative party has understood the need to back up words with action. John Major's Administration, in the early 1990s, spent hundreds of millions of pounds, quite rightly, via the know-how-fund, on the reconstruction and regeneration of eastern Europe.
	When, two years ago, we debated the accession Bills which brought the 10 new states into EU membership, the then shadow Foreign Secretary, the right hon. and learned Member for Devizes (Mr. Ancram), was very clear on the need to invest on enlargement. He said:
	"Successful enlargement will require commitment and courage from the applicant countries as well as those who are already members."—[Official Report, 21 May 2003, Vol. 405, c. 1036.]
	He also said, quite rightly:
	"Countries such as Poland are crying out for investment in their infrastructure, and wise use of structural funds could be crucial in helping their economies to prosper."—[Official Report, 5 June 2003, Vol. 406, c. 372.]
	So I believe that there is unity across the parties about the policy of enlargement, and about the need for us to help pay for it. That means helping to build up the economic and social infrastructure of these east and central European societies, so long neglected under Soviet control. It also means constructing better roads, railways and industrial estates, regenerating run-down areas, developing the social housing stock, and so on. That sort of investment directly benefits us too.

Mark Prisk: Last Tuesday I attended the summit of the European Union's small business organisations here at the Palace of Westminster. At that meeting I was struck by the overwhelming view of the small businesses of the new entrants to the EU that under the British presidency of the EU the Lisbon agenda has not progressed one whit. What has gone wrong?

Jack Straw: If my hon. Friend will allow me, I should like to make some progress before giving way.
	The rebate was designed to deal with the unfair treatment of western European states of comparable prosperity. It was never intended to be a means of redirecting money from much poorer states to the United Kingdom. Indeed, in the early 1980s, when the rebate was negotiated, there was no serious expectation that the European Union could or would expand eastwards into the Soviet empire. I have been unable to find any occasion on which an hon. Member on either side of the House said that the new and poorer accession states should pay, directly or indirectly, the rebate in full. In any event, as I have already told the House, the rebate will rise from an average of €5 billion per annum in this period to €7 billion per annum in the next. It cannot therefore be said that we are giving it up. Our offer on enlargement involves a reduction of about €1 billion per annum in what the rebate would otherwise be. However, the rebate remains on every penny and cent of spending on the common agricultural policy anywhere in the 25 member states of the European Union, and on all spending in the 15 western European states.
	When Baroness Thatcher made her statement on the Fontainebleau summit in 1984, you and I will remember, Mr. Speaker, because we were both in the House, that it did not quite receive the rapturous reception that is now written up for it. I asked the right hon. Lady why she had failed in her stated intention of achieving a broad balance between the United Kingdom's contributions and the amount that we got back. I pointed out that in the following year, and the year after, despite the rebates, Britain's net contribution would be more than it had been in the previous three years.
	As it turned out, I underestimated the scale of the problem that Mrs. Thatcher was describing, for over the following 20 years the United Kingdom paid—after the rebate—twice as much net into the European Union compared with similar sized economies such as those of France and Italy. Under our proposals, we will for the first time achieve broad parity. For the first time in the 30 years of our membership and for the first time in the 21 years since the rebate was agreed, we will be making a net contribution broadly equivalent to those of France and Italy.
	Mrs. Thatcher was unsuccessful in another respect too: she did not constrain the growth of the European Union's budget as a share of the European Union's economy. Under successive Conservative Administrations, it rose by 50 per cent. It is this Government who have led the way to budget discipline—an average of 1.03 per cent. of gross national income over the next financial period and falling to below 1 per cent. on a commitments basis by 2013. Finally, the previous Administration failed to sustain reforms which dealt with the inequalities underlying the rebate—the imbalances of their spending on the common agricultural policy.
	That leads me briefly to my third point: the case that we are making for reform. Reform in the European Union is necessary if the Union and its member states are to compete effectively in a world economy that has changed beyond recognition over the past 20 years. We are pushing for parallel reforms in the World Trade Organisation negotiations, which got under way yesterday. We are proposing in our budget a full-scale review of expenditure and revenue, including agriculture, and the right of the EU to make further decisions in this financial period, rather than having to wait until 2014.
	When Mrs. Thatcher returned from Fontainebleau she admitted to the House that because her Government had taken so much time on the problems of the budget, they had not been able to turn as much attention as they should have done to some other vital problems in Europe. We have done better. Away from the headlines, the Government have been getting on, successfully, with the vast majority of the business of a presidency.
	In pursuing our agenda we have worked closely with the European Parliament. British Ministers have visited the European Parliament on more than 50 occasions. My right hon. Friend the Minister for Europe sends his apologies to the House. He is at the European Parliament today—we have an able substitute in my hon. Friend the Minister for the Middle East—and my right hon. Friend the Prime Minister will be at the European Parliament tomorrow. This engagement with the European Parliament has been particularly worth while in our discussions with British MEPs. Indeed, I am heartened to say that we have been greatly assisted by British MEPs of all parties.
	As the House knows, each of the main British political parties is able to magnify its influence in the European Parliament through membership of the mainstream European political groupings. My party does so through the party of European Socialists, the Liberal Democrats do so through the Alliance of Liberals and Democrats for Europe, and the Conservatives do so through the European People's party and European Democrats or EPP, which covers the centre right. Who joins which group is a matter for MEPs and their parent British political party and not for the House, but the consequence of those decisions can directly affect the national interest. The House therefore has an interest in that.
	All those groupings are loose confederations. There cannot be a single party which agrees with every item on the European political agenda. National party groups are free to depart from the groupings' line where they wish. That right was enshrined, as far as the EPP is concerned, by the right hon. Member for Richmond, Yorks when he was Leader of the Opposition in the agreement that he made with the European People's party in 1999. However, there is real practical value for the UK in these groupings. In particular, there is practical value in the Conservative party's membership of the EPP, because the EPP is the largest grouping in the Parliament and has crucial positions on many of the key committees. It holds such positions on five of the key committees, and I am grateful for the support that we have received from those co-ordinators.
	The right hon. Gentleman recognised the importance of that when he was Leader of the Opposition. Indeed, as I said, he negotiated an agreement in 1999. When he signed that deal, he said that Tory MEPs would be joining
	"an enlarged coalition with centre right parties and will work alongside allies old and new".
	He went on to say:
	"Conservatives will stick to their principles and have influence".
	His predecessor continued the link, as did his two successors. Now we read that the right hon. Member for Richmond, Yorks is being pushed by his new leader, the hon. Member for Witney (Mr. Cameron), to leave the EPP
	"in a matter of months"
	and to form a new grouping.
	Who will sit in this new grouping? The right hon. and learned Member for Rushcliffe (Mr. Clarke) thinks the Tory MEPs will have to sit alongside "ultra-nationalists". The Conservative MEP, Mr. Struan Stevenson, says that they are
	"the MEPs whom no other group will tolerate, and include people like Jean-Marie Le Pen, Alessandro Mussolini and"—
	even worse—
	"Robert Kilroy-Silk".
	In a later article he describes them even more succinctly as
	"fascists and nutters that nobody else will sit with".
	The hon. Member for Grantham and Stamford (Mr. Davies) has asked whether the Conservatives really want to sit with
	"the barmy-army of obscure right-wing continental politicians".
	The deputy leader of the Conservatives in the European Parliament who used to sit in the House, Sir Robert Atkins, thinks his new bedfellows will be
	"a pretty unappealing ragbag of fringe politicians".
	He gives further details:
	"We would find ourselves in the company of The League of Polish Families (racist and Europhobic), the Danish People's Party (Ian Duncan Smith banned us from even talking to them!), the Italian Fascist Party, and, of course, UKIP".
	Indeed, he quotes the right hon. Member for Richmond, Yorks as saying in 1999:
	"I simply cannot afford to have my political opponents in the House of Commons suggesting I am isolated from the mainstream Conservative parties on the continent of Europe."
	That is exactly what his new leader is proposing.
	I am therefore not surprised that when the right hon. Gentleman was interviewed about that on the "Today" programme he was plainly extremely uncomfortable. After all, it showed that the promised unity of the Tory party had lasted for all of 36 hours. But it also shows that the Conservative leader, the hon. Member for Witney, is prepared to tear up solemn manifesto commitments, for the Conservative election manifesto in 2004 stated that
	"Conservative MEPs will remain allied members of the EPP-ED parliamentary group for the duration of the 2004–2009 legislature."
	In the right hon. Gentleman's argument with his new leader he has our full support and our full backing in fighting for what is right and for the national interest, and in fighting for a Conservative party that at least on one thing sticks to the principles on which it was elected only 18 months ago.

William Hague: I am grateful to the Foreign Secretary for the kind remarks with which he began his speech and for his welcoming me back to the Front Bench. He attaches an importance to the Darlington & Stockton Times that is appropriate for any Foreign Secretary of this country.
	I am delighted that my mere presence on the Front Bench has produced the radical reinterpretation of the Government's policy on the euro so that the pound has now been saved. When the Foreign Secretary discusses that reinterpretation of policy with the Chancellor and the Prime Minister, he may be carrying out a job rather like the one that he described for me, which involved doing a lot of travel but taking very few decisions.
	I am sure that we will have some vigorous debates across the Dispatch Box. My comments to the Foreign Secretary will be entirely free of personal abuse. According to the new convention in the Foreign Office, we can leave that to retiring ambassadors, who will no doubt continue to dish it out, so there is no need for the Opposition to indulge in such things.
	Since there will inevitably be much disagreement, I shall start on a note of concord and congratulation to the Foreign Secretary. The negotiations on Turkish accession were protracted—they must have been very difficult and undoubtedly required hard work and skill—and he successfully steered them to the conclusion that we all wanted. I have no inhibitions in congratulating him on that achievement and hope that future blockages in the process of admitting Turkey to the European Union can similarly be overcome.
	There may be other areas of agreement across the Floor of the House and it is entirely possible that one of them is the fate of the European constitution. In addition to his role at the last hour in saving the pound, the Foreign Secretary played a key role on the European constitution, because if, as was reported, he persuaded the Prime Minister to commit the Government to holding a referendum in Britain, and if, as was reported, the British commitment prompted President Chirac to make the same commitment in France, then the Foreign Secretary did more than any other individual to ensure that the constitution was wrecked in May and June by voters in France. Although he is careful not to show any pleasure about that outcome, I cannot recall him issuing any words of regret, and even now there is no sign that it is causing him undue distress.
	If the Prime Minister and the Foreign Secretary were happy to see the deeply flawed constitution collapse, why were they prepared to recommend it to the British people in the first place? That they should keep their quiet satisfaction quiet is understandable. What is not understandable—my hon. Friend the Member for Stone (Mr. Cash) has made this point—is that they should make no use of the impasse on the constitution to take the initiative, to show leadership in Europe and to put forward ideas of their own.
	It is six months since both France and the Netherlands gave the constitution a resounding no. Within days, the Foreign Secretary announced a "pause for reflection". We have been having the pause for six months, but where is the reflection? He was unable to enlighten us on that point in his speech. Is this not the time, buttressed by grave anxieties about the remoteness and unresponsiveness of EU institutions revealed by the referendums, to champion fresh ideas about a more flexible Europe with a stronger role for national Parliaments, which many hon. Members on both sides would be happy to support?
	Was not that six months the time to speak the much needed truth that ever mightier central institutions in a tightly integrated bloc are an idea whose time has gone? Instead, in the absence of any alternative, the new German Government say that they will "seek to advance progress" on actually adopting the constitution once Germany takes the presidency in 2007.

William Hague: The hon. Gentleman will hear plenty, but since the Foreign Secretary spent the last eight or nine minutes of his speech discussing Conservative MEPs in the European Parliament, the hon. Gentleman cannot lecture us about discussing matters that are relevant to the EU summit. These debates provide an opportunity to raise all issues about Europe.

William Hague: I am delighted that the hon. Member for Leicester, East is playing a more constructive role outside the House than he played a few moments ago inside it—that is wonderful news.
	It is common ground across the House that Europe faces a crisis—the Prime Minister used the word "crisis" in his address to the European Parliament in June—and massive demographic social and economic challenges. I believe that it is also common ground that the EU has so far shown few signs of being able to meet those challenges. When the Prime Minister came to this House to trumpet the Lisbon summit, he announced
	"a sea change in European economic thinking"
	along with a "fundamental reorientation" that would bring
	"concrete measures with clear deadlines"
	and
	"urgent measures to make the European economy as a whole more competitive".—[Official Report, 27 March 2000; Vol. 347, c. 21.]
	Five years after all that, we find the Government calling plaintively for the implementation of the Lisbon agenda. The terrible truth of it all was laid bare by the report last year by Mr. Wim Kok and his distinguished colleagues, which pointed out that most of Lisbon had never been implemented, that as a result Europe was losing ground more quickly to the United States and Asia, that
	"its societies are under strain"
	and, as he ominously summed up:
	"What is at risk in the medium to long run is nothing less than the sustainability of the society Europe has built, and to that extent, the viability of its civilisation."
	The goal of the Lisbon agreement was to make Europe into the world's foremost knowledge-based economy by 2010. Now that we are halfway there, we can see that there is no prospect of being able to make such a claim in five years' time—far from it. Two studies in the past week have shown that European spending on research and development is falling further behind target and the gap with the United States and Japan is widening. Such figures are deeply disturbing, because it is obvious that, as European economies will not be able to compete with China and India on price or have a larger available work force, it is self-evidently vital that their capital must be used more intensively and productively if they are not to suffer severe economic consequences.
	It is impossible to envisage Europe competing effectively without high levels of investment in R and D and the highest possible standards of higher education. Yet the United States is striding ahead in higher education-based research and now has 17 of the world's top 20 universities. The Prime Minister raised higher education as a matter of serious concern in his second speech to the European Parliament on 26 October and asked the Commission to prepare a report on it. But the Government must realise that, as the success of higher education in the United States relies on the use of much private capital, deregulation, and the use of the English language, we are as likely to find the answer to these issues in the European Commission as on the moon.
	Anyone looking at the EU from outside, dispassionately and objectively, would think that tackling these issues at this and every summit would be the almost daily preoccupation of European leaders. Even according to the Commission's own forecasts, the European share of world economic output is set to be virtually halved in our lifetimes. The absence of any sense of urgency is remarkable and it is hard to see it as anything other than a collective dereliction of duty by Europe's leaders. Faced with a massive loss of relative economic strength, with profound consequences for the future of employment, prosperity and social cohesion and justice, the general response is indistinguishable from inertia and indifference.

William Hague: It is interesting that, when we try to discuss some of the greatest issues that will affect Europe in the future the hon. Gentleman can only read out a party brief about Conservative MEPs in the European Parliament. I assure him that nothing will be more encouraging to my right hon. Friend the Leader of the Opposition and me in carrying out the policy than that great concern is expressed about it by Members from other parties in the House of Commons.
	It is only fair to acknowledge—the Foreign Secretary made this point in his speech—that the Commission under Mr. Barroso has shown an increasing consciousness of such issues and, in a first tiny sign of hope, has managed to withdraw 68 pending proposals for legislation as part of a deregulation initiative. However, we must not get overexcited about that, as it turned out that one third of those withdrawn regulations were defunct association agreements with countries that have now joined the EU, and the total of 68 regulations withdrawn has to be set against the net increase of 4,806 regulations and directives over the past eight years alone.
	To be fair to the Prime Minister, his speech to the European Parliament in June did call for a change of direction. He said there was
	"a crisis of political leadership".
	He is right. He questioned whether Lisbon was being implemented and whether the EU was in any way
	"reconnecting Europe to the people".
	He was clear that
	"we cannot agree a new financial perspective that does not at least set out a process that leads to a more rational budget",
	and he said in ringing tones at the end that the people of Europe
	"are wanting our leadership. It is time we gave it to them."
	Subsequently, there has been astonishment in Europe that such bold rhetoric has been followed by so little initiative. While to us in Britain it is entirely normal to hear a brave speech by the Prime Minister that bears no resemblance to what follows, it comes as a shock to people in other countries. As the former President of Poland put it,
	"When I read what Tony Blair said in front of the European Parliament, I harboured the hope that the Brits would arrive in the Presidency with a new momentum . . . since then the weeks pass and scepticism grows."
	MEPs have apparently circulated missing persons notices featuring the Prime Minister's face, one of which said:
	"we have lost the President of the Council. From what we hear he is the British Prime Minister Tony Blair, although nobody has seen or heard of him . . . one rhetorically brilliant speech without consequences or follow-ups is simply not enough to secure success."
	Everyone in this House should be aware of that, and the Prime Minister above all.
	I doubt that Foreign Office Ministers can put their hands on their hearts and say that Britain is now more respected in Europe than six months ago, or that any seasoned commentator or other Government in Europe judges their presidency to have been a success. Indeed, it seems unlikely that even they would judge it a success, given the objectives that they originally set out for themselves.
	This debate on Europe in the run-up to this summit is different from those on most previous occasions. We have often engaged in a fairly predictable debate—for and against the constitution, or the social chapter, or the euro, or whatever it may have been—but this time Government and Opposition agree that Europe faces an intensifying crisis, including a crisis of leadership, to use the Prime Minister's own words. The tragedy is that, for whatever reason, and with all the admitted constraints on what can be achieved in a period of a few months, the Government have not shown the consistency, energy and purpose necessary to have any hope of alleviating that crisis or changing prevailing attitudes. They have often claimed to be "winning the argument" in Europe, but there is little evidence of that.
	One deeply depressing example of failing to win the argument is being played out in the world trade talks in Hong Kong. Could not the Government have given a stronger lead towards pushing the European Union into a position more committed to free and fair trade and assisting real progress in a way that would help developing countries? Has not the lack of any reform of the common agricultural policy become a major problem for world trade negotiations, as demonstrated by the statement by Peter Mandelson's spokesman that EU subsidies will not be reduced by "one cent"? Should not the EU be going much further towards reducing tariffs and export subsidies? Is it not depressing and disturbing for the Government when a Commissioner who was until recently one of their own colleagues attacks the idea of liberalisation and states his opposition to
	"what the consequences would be if we were simply to do as some in the British government . . . are calling for"?
	I hope that when the Minister winds up he can say whether he considers that the Government have used all possible weight to influence the world trade talks in a way that would open up opportunities for developing countries without imposing over-stringent conditions on them and, if they have used such weight, why it has failed. Surely we did not join the EU to stand in the way of trade liberalisation and free trade. The Swedish Trade Minister said:
	"The French have been very active, not least in the public debate, while there has really been very little said by the free traders."
	Why has so little been said?

Menzies Campbell: This has been a slightly unusual debate in a number of respects. First, the hon. Member for Leicester, East (Keith Vaz) departed from the sanctity of the ballot and revealed that he had voted for the Foreign Secretary—no doubt he had no ulterior motive whatever in doing so. A habit also seems to have arisen, almost like the congressional record in the United States, of making reference to local institutions such as local newspapers. Not to be left out on this occasion, I should like it to be known that I more than value the contribution of the St Andrews Citizen to the great political debates of our time.
	There has been a warm and genuine welcome—an affectionate welcome—for the right hon. Member for Richmond, Yorks (Mr. Hague), who demonstrated, in a trenchant speech, the considerable talents that he possesses and of which we hope to hear and see more in future debates. I have been trying to formulate in my mind how the change in personnel effected by his new leader could best be characterised in relation to him. I suppose the best way of putting it is to say that the hon. Member for Witney (Mr. Cameron) shot the fox and gave us the comeback kid.
	I shall discuss the issue of the deal in some detail in due course, but let me first point out that at one stage the Foreign Secretary said that no deal was better than a bad deal. The phrase has a certain resonance on occasions such as this, but when we analyse it we must ask what would be the consequences of there being no deal. What would be the political consequences in the European Union, and what would be the consequences for the influence of the United Kingdom? Can we be confident that if the matter were, so to speak, kicked into the arms of the Austrian presidency, a better deal would emerge from those circumstances?
	Those are all questions that cannot, I think, be answered in this debate. Although we now have, in the form of a ministerial statement, an up-to-date indication of the Government's position, all the issues will be on the table on Thursday and Friday, Saturday, Sunday and perhaps even Monday, and the truth is that they may well change in material respects. The verdict on the proposals will have to rest until the Government, on Monday or perhaps even Tuesday of next week, return to report on precisely what they have achieved.
	To an extent, that makes our debate a little artificial, but it is undoubtedly important, because, as the right hon. Member for Richmond, Yorks said, the European Union stands at a very important point in its history and its evolution. It is worth reminding ourselves—and the right hon. Gentleman made some reference to it—that in his speech to the European Parliament on 23 June, the Prime Minister eloquently set out United Kingdom priorities for the presidency. The speech received considerable support from those who heard it in the Parliament: indeed, it brought the Prime Minister an unaccustomed ovation there.
	The Prime Minister said in his speech that he believed that the French and Dutch rejections of the constitution constituted
	"not a crisis of political institutions, it is a crisis of political leadership. People in Europe are posing hard questions to us."
	In that speech, he raised expectations. He raised expectations that the crisis would be met, and that the hard questions being posed by the people of Europe would at least be the subject of an attempt to answer. I am afraid that, despite the Foreign Secretary's brave face on matters, history will judge that—with the exception of the opening negotiations on the accession of Turkey and Croatia—there has been, unhappily, a lack of substantial achievement during the presidency.
	Some will say that the Prime Minister has failed his own test: that the political leadership to which he pointed in that eloquent speech has not been on display, and that the hard questions being asked by the European public have not been answered. I suppose one could say that the Prime Minister has been caught between the promise of his own rhetoric on that occasion and the failure of achievement that many will consider to be a characteristic of this period of the United Kingdom's responsibility.

Menzies Campbell: I spotted it, but four weeks away from the end of the presidency, one has to ask precisely what kind of impact it will have? The whole House has been united on this issue for a long time. Surely, if we were serious about securing this necessary reform, we would have been in the market—no pun intended—with proposals long before four weeks before the expiry of our responsibilities.

Menzies Campbell: Perhaps they need one of the devices that can be fitted to the motor car: if one plumbs in the proper information, it will provide a direct road-by-road demonstration of how to get from here to there. We can all agree, I think, that CAP reform is vital and that much more needs to be done.
	In that context, we should note that, in 2003, the Government endorsed the financing arrangements for the CAP, which would remain unchanged until 2013. I have some sympathy for the Prime Minister because on that occasion he was bounced. By the time he arrived at the summit, Messrs. Schroeder and Chirac had arrived at an accommodation, shall we say, that they were determined to press through.
	Doha has already been mentioned by myself a few moments ago and by the right hon. Member for Richmond, Yorks. In the White Paper, "The UK Presidency of the European Union", let me remind the House of what the Government said under the heading, "Prospects for the EU in 2005":
	"The UK will play a key role in moving the Doha trade round negotiations forward . . . to ensure a successful outcome at Hong Kong . . . which helps to deliver a freer and fairer global trading system."
	The Foreign Office website established for the purpose of the presidency claims that one of the priorities is to
	"demonstrate clear progress in breaking down barriers to trade".
	Even on the most generous analysis of the Government's position, those objectives will clearly not have been achieved within this presidency.
	We had some amusement at the expense of the Conservative party a little earlier. Looking around, I suspect that not all of us remember Sir Robert Atkins. Let us describe him as a former hon. Member with direct and robust views and a man of considerable political acuity. It is remarkable how reputations can improve as soon as one has left and gone elsewhere. I cannot do otherwise than refer again to the quotation attributed to Sir Robert:
	"We would find ourselves in the company of The League of Polish Families (racist and Europhobic), the Danish People's Party (Iain Duncan Smith banned us from even talking to them!)"—
	they must have been pretty Eurosceptic for the then leader of the Conservative party to have thought that his colleagues should not talk to them—
	"the Italian Fascist Party, and of course UKIP. This is a pretty unappealing ragbag of fringe politicians".
	Struan Stevenson, a Scottish Conservative MEP, said:
	"We would have to sit round the table on a weekly basis with these fascists and nutters that nobody else will sit with".

Menzies Campbell: Let me say straight away that I do not regard, and never have regarded, the hon. Gentleman as nutty. He takes a particular view of Europe that I do not share, but I admire the fact that he has not departed from that view and that he takes every opportunity to advance it. Also, he never joined UKIP, which, if I may say so, is a clear indication that he does not fall under the category of nuttiness or anything similar. It is clear, however, that those who represent his party's interests in the European Parliament are going to need an awful lot of persuading that they should not associate with the conservatives of the EU countries. If I may say so, I was impressed by what the Foreign Secretary had to say about the national interest, as reflected in an article written by my hon. Friend the Member for Eastleigh (Chris Huhne) in one of this morning's broadsheet newspapers.
	Let me finish on the bright spot of Turkey and Croatia, which I believe represent a substantial achievement on the Government's part. There will be difficulties and the Turkish Government and people must understand that, however strong the advocacy of the US on their behalf, the Copenhagen criteria must be met. They must be met, furthermore, not just in letter or form, but in substance. The EU cannot and should not reduce its standards, however politically desirable it may be to bring in the first Muslim country. There can be no doubt, however, that what has happened is a substantial achievement by the Government, so the Foreign Secretary and the Minister for Europe most certainly deserve recognition.
	I also want to mention briefly the more open attitude towards the Balkan states. Let us remind ourselves that when the former Yugoslavia broke up, the constituent parts were necessarily outside the European Union. They were outside of it because of political and historical events. The former Yugoslavia imploded with all the devastation—including Srebrenica, where perhaps 200,000 people were killed—that came with it. I venture to suggest that, had those countries been members of the EU, much of that terrible bloodshed would not have taken place. Slowly and painfully, not always immediately successfully, these constituent parts of the former Yugoslavia are coming to a better understanding and realisation of democratic institutions and tolerance. Unfortunately, tolerance is not always evident: 18 months ago, Kosovo provided a glaring and unpleasant example.
	As long as these countries have the prospect of becoming members of the European Union, it seems to me that they have a much better chance of achieving the levels of stability, conformity with the rule of law and democratic institutions that are necessary. The stimulus and inducement of EU membership is extremely significant. We talk about the details of the budget that are so important to us because we are members. They have an impact on our financial circumstances and our economic opportunities. However, we should remember that a much larger prize, in many ways, remains to be achieved—the continuing enlargement of the EU in order to provide a bulwark for democracy in a part of the world that went to war three times in 100 years.

Hugh Bayley: The forthcoming EU summit is clearly in our minds, but the purpose of politics is not just to deal with the here and now; it is also to think and plan strategically about the welfare of our country and of future generations—our children and grandchildren. We need to face up to the fact that the EU's long-term economic prospects are poor.
	Compared to the US, China or India, our competitiveness is falling quite sharply. We have the problems of an ageing and shrinking population and underfunded pension systems. The European Commission estimates that, by the middle of this century, the UK's share of world gross domestic product will have halved. Goldman Sachs has said that the EU's relative decline will be even greater, and that our share of global GDP will fall by something like two thirds.
	Therefore, if we want to survive as a major player in world markets and retain a strategic role in global affairs—in respect of climate change, peace and security and combating terrorism, for instance—we need to set in train urgent and radical reform of our national economies. We need to invest more, especially in science and technology, to increase our productivity and competitiveness, and to create new products, and especially new services, to sell in world markets. We need to save more, especially to fund an ageing population in retirement. We need to continue to reduce the costs of doing business, and to pursue energetic welfare-to-work policies.
	The UK has taken a lead in Europe on all those policies. That is why our economy is performing better than other EU economies. It is why our growth rate has been higher in recent years, and why our unemployment rate is significantly lower.
	In a rapidly globalising world, few problems can be solved by one country acting alone. The economic challenges that I have described cannot be solved within the boundaries of our country. The right hon. and learned Member for North-East Fife (Sir Menzies Campbell) spoke eloquently about the need for trade reform, and there are other problems that can be addressed only in partnership with other countries, including the quest for environmental sustainability, international migration, immigration and asylum, organised crime, the international drugs trade and terrorism.
	We therefore need to co-operate internationally, not least with the other EU states. On this morning's "Today" programme, I heard a Conservative MEP bemoan the fact that the EU has the competence to negotiate on the UK's behalf in the World Trade Organisation, and that it is Peter Mandelson rather than the Secretary of State for Trade and Industry who represents the UK's interests. The MEP made the case that UK trade policies are more progressive and would be more likely to achieve agreement in the WTO than the compromise position proposed by Commissioner Mandelson. That is to ignore the fact that the WTO works on the basis of unanimity, and that if one country in the EU can veto CAP reform and the reduction of agricultural subsidies, so can one country in the WTO.
	I believe that the CAP is the stumbling block when it comes to making substantial progress in the development dimension of the current WTO round, and that it must be changed. Separating our trade representation from Europe would not help us to reform the common agricultural policy, as that must be done within Europe. All of that means that backing away from Europe is not the solution. We need the EU to deal with the global problems that I have set out, but we need a reformed, modernised and more effective EU that is fit for the 21st century.
	First of all, we should begin by reforming the EU budget. I believe that the Government are right to press for a reduction in overall EU spending. We need to rein in state spending to improve our economic competitiveness in respect of emerging economies such as China, India and Brazil, and in relation to the US.
	Secondly, the Government are right to agree to pay towards the costs of structural reform in the 10 new EU member states. Those reforms will make those states richer, and us richer too. That is what has happened with every EU enlargement to date. The resources that the EU put into Greece, Spain and Portugal made those countries and all other member states richer, because we trade with one another and our economies are interdependent.
	However, I do not believe that my right hon. Friend the Prime Minister's proposal to reduce the overall budget slightly will impede aid needed for the new EU member states. The Financial Times reported today that, in the first two years since its accession, Poland has been allocated €8.6 billion in structural funds but that to date it has spent only 4.3 per cent. of that amount and has committed only about 50 per cent. of it. The newspaper also said that, so far, the Czech Republic has spent only 2.6 per cent. of the €1.7 billion that it has been allocated. The accession countries will therefore get the money that they need to carry out the necessary structural reforms even under the slightly reduced overall budget that the UK proposes.
	Thirdly, the UK is right to propose changing the EU rebate, because circumstances have changed. All 10 new member states have much lower average incomes than the UK, and eight have emerged from the shadow of communism. I have many disagreements with Margaret Thatcher, but she was nevertheless a tough and determined opponent of communism. She wanted to free states from the dictatorship under which they existed. That was because she believed in freedom, not because she wanted them to pay a rebate to the UK Treasury. She was not fighting to ensure that Estonia, Latvia, Poland and the Czech Republic would subsidise the UK.
	In his youth, the right hon. Member for Richmond, Yorks (Mr. Hague) was a passionate admirer and supporter of Margaret Thatcher, so I am sorry that he should seem to fudge on the question of whether the accession states should make a contribution to the UK rebate. Our Government are right to say that that burden should not fall on them.
	Another way in which circumstances have changed since 1984, when the rebate was agreed by EU member states, is that the UK is much more prosperous now. In 1984, unemployment stood at 3,298,000, or 12.1 per cent. of the work force. On the same measure, it has now fallen to 4.9 per cent. The UK average income, or GDP per capita, was £5,750 in 1984, but now it is £19,537. Even adjusting for inflation, that represents a real-terms increase of 62 per cent.
	I looked this morning at the report in the Financial Times of the 1984 EU summit when the rebate was agreed. It said:
	"the one-nation deal for the UK is based on an explicit acknowledgement that it is a relatively poor member state".
	In relative terms, the UK was poor then, but it is not now. Average incomes here are higher than in Germany, France, Italy or Belgium.
	Fourthly, the Government are right to say that we will not abandon the rebate without reform of the CAP. The CAP is bad for families: according to a recent parliamentary answer, the average family of four would save £5 a week on food if the CAP were scrapped. The CAP is also bad for taxpayers: to that average family of four, the cost of CAP subsidies amounts to a further £3 or £4 a week. That means that the CAP leaves the average family worse off by nearly £10 a week. The CAP is also bad for the EU because it is a totally perverse misuse of its overall resources: 40 per cent. of EU spending goes on the CAP, whereas 5 per cent. of the EU's population works in agriculture and produces only 2 per cent. of the EU's output.
	CAP reform is necessary to remove a roadblock in the way of progress in the WTO negotiations. It is necessary for global trade justice, and it is a precondition for the economic reform that the EU needs to make to secure our own future prosperity. Oxford Economic Forecasting calculates that the EU's GDP could be boosted by €200 billion a year, which would create hundreds of thousands of new jobs in the EU, if CAP subsidies were ended and EU tariffs were cut.
	It is necessary not just to reform the CAP; perhaps the Minister can also ensure that the UK team takes to the summit the need to reduce tariffs. We have tariffs of more than 100 per cent. on many foodstuffs: 170 per cent. on lamb, 120 or 130 per cent. on beef and 100 per cent. on rice. It is utterly absurd to impose that burden on consumers in the EU, particularly on those in this country, which is such a large net food importer. We in the UK alone would benefit by £20 billion a year—about £1,500 per family of four—if that economic liberalisation, the abandonment of the CAP and a reduction in tariffs were made. Developing countries would gain at least twice as much as a proportionate of their national income as we would in the EU.

David Heathcoat-Amory: Those are trivial and peripheral changes. I am talking about the need for deep-seated structural reform of the European Union, as signalled in the Laeken declaration of December 2001, when it was asserted that Europe stood at a crossroads. It was said that Europe was behaving too bureaucratically and referred to the gap between the leaders of Europe and the led. It called for more democracy and simplification. None of that was done.
	The Government tabled about 200 amendments, only a handful of which were accepted. They almost immediately gave up on the concept of the constitution. Originally, the Prime Minister said that he did not want a constitution, but he retreated from that when it became inevitable. He gave up, too, on his promise not to make legally binding the EU charter of fundamental rights. Then he actually signed the constitution. He cannot have believed in large chunks of it, because we return occasionally to the Government's unsuccessful amendments, but we now know that the constitution was turned down not by the politicians of Europe but by the people. The Government failed to take advantage of that reform process. The entire process was a failure, so it is not good enough to say, in the dying days of the British presidency, that the Government stand for reform.
	The same process—talking tough in advance and then giving way—is apparent in the question of the budget. The Prime Minister gave explicit and unambiguous assurances at the Dispatch Box that were simply forgotten. I shall not repeat the process eloquently outlined by my right hon. Friend the Member for Richmond, Yorks who showed how the Government started by saying that the rebate was justified and would not be given up in any circumstances. Then they said it would be given up in return for CAP reform and then in return for talk of CAP reform. Now they say that it will be given up with no CAP reform.
	The present budget is indefensible and, as long as that situation endures, we must not give up our only real lever for reform—the British rebate. This year, this country is giving more than £4 billion net to a European budget whose accounting system is pre-15th century. The former chief accountant of the EU, Marta Andreasen, discovered that the Commission did not even use double-entry bookkeeping, which was invented in Venice in the 15th century, as I know because I am a chartered accountant. It was a European invention, but it has not yet reached Brussels. Into that unreconstructed, unreformed accounting system, where the auditors have refused to sign off the books for the past 11 years, we pay a net amount of more than £4 billion.
	During the debate, it has been said that the poorer countries of the east need that money. In fact, they joined under the present system not to obtain handouts but to exert a comparative advantage in a free market, as well as for the supposed political and security advantages. They did not join for an endless stream of cash transfers. They are not by any means the poorest countries of the world, but if there is a case for helping the poorer countries of the east and one accepts that obligation, it would be far better not to meet it by filtering money through the most inefficient and corrupt accounting system in the western world.
	The same is true about our structural funding and the CAP. Indeed, several Members have said that we need the structural funds. We represent different parts of the UK, some of which are in receipt of structural funds, but for every £2 we pay into the EU budget, we only receive back just over £1. That is a bad bargain. If we really want to look after our farmers and those in receipt of structural funds, it would be much easier, and certainly more efficient and better for the taxpayer, if we repatriated that money. Indeed, the Chancellor of the Exchequer advanced the proposition that we should repatriate structural funding.

David Heathcoat-Amory: One of the minor scandals of the European constitution is that it entrenched and formalised a common fisheries policy that is bad not just for fishermen but also for fish. Occasionally, I visit Iceland where I have seen the advantages to all concerned of the concept of stewardship. Those who own and control their own waters tend to look after their fishery resources, but when there is a common policy everybody tries to get what they want. That is intensely bureaucratic, bad for the environment and bad for the livelihoods of our fishermen. Enormous changes are required, but all the changes that have been made were in the wrong direction. In the constitution, the Government tried to give whole CFP away.
	I want to advance a wider truth and put a wider question. Why is the cornerstone of our foreign policy—the EU—such a nightmare to deal with for all Governments? When the Government go to the next European summit, all they can hope for is to avoid damage. They never go to summits with the hope of changing the world for the better; it is all about fighting a desperate battle to preserve what remains of our self-government, to stop too many advances on our criminal justice, foreign policy and defence. We are fighting a losing battle.
	As my right hon. Friend the Member for Richmond, Yorks said, the European constitution is already being implemented by the back door, by manipulating the existing treaty base in collusion with the European Court of Justice. He gave an example of how a recent court case will allow criminal justice matters to be spread right across member states, even if those member states' Governments disagree. The situation is in fact worse than that. The court case signals the fact that future environmental and other directives will require criminal penalties. Even if the directives are agreed by majority voting, as they will be, member states that vote against them will have those criminal penalties imposed in their domestic jurisdictions. There can be no clearer example of the way in which the House of Commons or another national Parliament will lose control of the most precious, basic and central power: imprisoning or fining citizens and electors.
	It was explicit in the European constitution that the power was to be given away. The constitution was turned down by referendums in other member states, but exactly the same measure is being introduced by the back door by manipulating the existing treaty base. That matter should be on the agenda of the summit at the end of the week. We should defend British interests against the encroachment of an expansive jurisdiction. It tells us something about the entire process of the European Union that the best for which Ministers can hope is to avoid further damage.
	With member states freed from the temporary and perhaps artificial unity of trying to create a European constitution, the real and deep-rooted differences in the European Union are becoming clearer. We have debated the budget this afternoon and I want to mention trade. We have had a year of making poverty history. The cause has mobilised enormous numbers of our constituents, who know that among the best things that we can do for the poorest countries of the world is to help them to get a bigger share of world trade. In fact, small increases in trade share do more good than a lot more aid.
	The paradox is that this country does not have a trade policy—we have given it away. Of the eight Ministers in the Department of Trade and Industry, only one deals with trade, and he is shared with the Foreign Office. There is half a ministerial job in the DTI dealing with trade. We have simply disarmed. We have no expertise on trade. We have sub-contracted the whole thing to the European Commission and our ex-colleague, Peter Mandelson, who is not really a negotiator, but more an impresario who is trying to synthesise an agreed position between the French protectionist ideology and what is loosely called the Anglo-Saxon, or liberal trading, position of the United Kingdom. He is failing to reconcile our interests with those of the French, but the victims are the poor: the poor in our country who could do so much better if we could import things more cheaply and consumer prices could be brought down thereby and, most importantly, the poor and the poorest in the developing world.
	Think what we could do if we were in charge of our own trade policy. We could import immediately goods and products that the developing world produces. There would not be competition with our farmers because we do not grow bananas and oranges in this country. We could import the goods from poor countries free from tariffs and protection, which would be to their advantage and ours. However, that is illegal. It is against treaty law because the European Union, to use its jargon, has an exclusive competence over trade policy. It is not only our interests that are being betrayed, but the interests of the poorest people in the world.

William Cash: In the course of today's debate, I have sensed a sea change, which is less obvious in some cases than others. I have participated in debates in this House for the past 20 years, and for the first time I have detected an element of realism, although it has not necessarily been reflected in the remarks by some of the more fanatical members of the Europhile contingent.
	Enlargement, which I have always supported, and the idea of co-operation in Europe, which I have also always supported, are producing their own consequences. It is apparent and clear, irrespective of whether any of us went to France during the French referendum, that the French people decided against the constitution, and the Dutch decided against it, too, but nobody can claim responsibility for that.
	The fact remains that a substantial shift is taking place, even if it is not yet more than a tremor. There is an increasing recognition of the lack of democracy in the European Union. The argument is beginning to move to the question of whether, irrespective of the fate of the constitution, the existing treaties are adequate to deal with the dynamic that I described. I mentioned the best efforts of the Prime Minister, although that is not to say that I think that his best efforts are anything like good enough. I took the trouble to read his speech to the European Parliament and agreed with many of the sentiments that lay behind it.
	As I said in International Development questions the other day, I am extremely glad that the Government are taking a far more constructive view about the developing world. We see all the debates that are going on in Hong Kong and in the Doha round, and the attempts to reform the common agricultural policy in the interests of getting a proper balance between farmers in the developed world and those who are desperately and damagingly poverty-stricken in Africa and other parts of the world.
	Yesterday, the European Court of Justice made a ruling—no doubt on the basis of some argument that had been put to it—gathering to itself the right to make decisions about the Marks and Spencer tax case. Cadbury-Schweppes is another such case. We need not go into the detail of that. Low growth and high unemployment are problems in France and Germany and in other parts of the eurozone.
	This realism is not born out of the so-called previous rantings of the Eurosceptic right. In the past, some have no doubt been prepared to point a finger at me, and perhaps even at my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory). I would say that there is no harm in looking at the record and asking who has been right over the past 15 or 20 years. It has been a shared operation by those who have persistently and consistently argued for a policy of Euro-realism. One extremely prominent new Labour Member of Parliament who is not that far from the Chancellor of the Exchequer said to me the other day in the Lobby, "Bill, you call it Euro-realism; we call it realism." Some of the policies that the Chancellor is putting forward show an understanding of the necessity for open markets and competitiveness.
	I have visited the countries of eastern and central Europe many times, and I have many friends there to whom I talk regularly. A few weeks ago, I had the pleasure of meeting some of them—they were from the Czech Republic—in this Parliament. They were social democrats, not from the centre right. They expressed their deep concern and disillusionment about overregulation in Europe, their discovery that their agriculture was being put under severe duress, the significant reduction in the amount of cultivated land in the Czech Republic because of the imposition of European quotas on products such as milk and sugar, and the fact that the Czech Republic had been self-sufficient in agricultural products before joining the EU but was now a net importer of them.
	Anyone who heard me say that a few years ago might have remarked, "There they go again—Eurosceptics ranting on." However, I read the information from an informal note prepared by an official in a European Committee, who heard what was said and took careful notes. It is necessary to work towards the co-operation in Europe that I mentioned, bearing in mind the comments of my right hon. Friend the Member for Wells, with which I agree, that the way in which the acquis and the treaties are constructed and the institutions established does not admit of the sort of reform that we want, let alone what the Prime Minister wants. We have an increasing amount of realism and a greater dynamic towards making things right yet a problem that is inherent in the structures prevents the latter from happening.
	The right hon. and learned Member for North-East Fife (Sir Menzies Campbell) is right to say that the Prime Minister has failed in the EU recently but that is because he is hitting his head against a brick wall. It is no good talking to us about 68 proposals for deregulation. As my right hon. Friend the Member for Wells said, they mainly deal with accession agreements and matters that are defunct. If we are to make a difference to dynamism and enterprise for those countries that are in a proper relationship in the European continent, we must make sufficiently radical changes to ensure that something happens.

William Cash: I concede that the percentages have changed as the hon. Gentleman described but we are now at a watershed in Europe. There is therefore a need, which also applies in the context of the developing world and in the interests of efficiency, to ensure that the levels are brought even lower. Time will tell, but at this juncture President Chirac makes it abundantly clear that there will be no change. That has become inextricably bound with the problems of the rebate, which has got bogged down. We shall see what happens in the next few days.

Edward Balls: The hon. Gentleman mentioned pro-euro realism. I believe that that phrase was first used by the Chancellor of the Exchequer in his Mansion House speech in 2001. The hon. Gentleman talks about withdrawing unilaterally in regard to agriculture and trade, and gives the impression, as members of his Front Bench have done, that we can somehow pull away from qualified majority voting or even leave important groups in the European Parliament, such as the European People's party. Is he not at that point withdrawing from the world of realism? Is not that form of realism really the realism of withdrawal?

William Cash: The hon. Gentleman comments from a sedentary position, but we would be digressing, and you will rightly intervene shortly, Mr. Deputy Speaker, if we are not careful.
	Problems relating to fraud are endemic in the European Union and have not been solved. There were the incidents involving Martha Andreasen, about which we have heard a lot. Nothing effective has been done to change the system to make it work properly. The Court of Auditors has failed to sign off the accounts for the 11th year. Those things are now common knowledge.
	I remember saying to the Prime Minister, shortly after he took up his post in 1997, that he was walking on water now but he would drown in Europe. At the time, he did not really believe that that was possible, but it really looks as if it might be happening. The cheerleader, Peter Riddell, an eminent columnist whom we all read avidly, said in a recently published book, "The Blair Effect 2001–05":
	"So after eight years Blair had failed in his initial aim of ending the decades of British distance, reservation and hesitation about Europe . . . Europe has been a central failure of his premiership. Moreover, since it was one of his top priorities in 1997, Europe is a failure that will feature heavily in the final assessment of his record in 10 Downing Street."
	If that is the case, and the analysis comes from somebody as respected and distinguished as Peter Riddell on a subject that he knows well, all I can say is that the situation has got completely out of control and must be restored, and the existing treaties must be reformed, which will include some extremely difficult but necessary institutional changes. I put it to my party that that will involve a realistic assessment of the kind of Europe that will be capable of delivering prosperity and democracy in the next century. I fear that it will not be capable of reform in its present shape, and that it will therefore fall to the individual member states—and Britain in particular—to take unilateral action to ensure that those things are done, first through diplomatic negotiation and secondly through assertion of the supremacy of our own Parliament.
	There is a vast amount at stake in terms of stability. That has been demonstrated by what is going on in France and Germany, and the rejection of the constitution. There is a massive democratic deficit. In my opinion and, I believe, the opinion of a growing number of people here and elsewhere in Europe—not among the elite, but among the ordinary people—there will be an increasing need to move to a form, whatever it may be called, of associate status. That will enable us genuinely to co-operate in a democratic environment, while sustaining enterprise and business in the new global economy and also ensuring that we preserve the rights of the people who elected us to make decisions on their behalf.

Angus Robertson: Another issue that is high on the EU agenda is people-trafficking. In recent days and weeks, a number of member states have announced that they have launched inquiries into alleged people-trafficking by one of our coalition allies in the fight against terrorism. Does the hon. Gentleman believe that the UK Government should work with our EU partners to stamp out all alleged people-trafficking?

Ian Davidson: Does my hon. Friend therefore agree that there should be no deal on the budget unless all concerned, including France, agree to re-examining the CAP, and that such re-examination and reform should take place before 2013?

Wayne David: Of course I want to see as much money coming into my constituency and nation as the hon. Gentleman does into his constituency and nation, but it is important to recognise what the Chancellor has said on many occasions: whatever the final agreement reached under the British presidency or later, the regions and nations of the UK that are presently in receipt of structural funds will not lose out. We have a cast-iron commitment, whatever the hypothetical scenarios of the future, that that support will be continuing.
	If agreement is reached in Brussels over the next few days—I certainly hope that it will be reached—it will not be the end of the story as far as the financial perspective and the budget are concerned. If agreement is reached, negotiations on the fine detail of the budget will continue next year under the Austrian presidency and discussions will carry on under the inter-institutional agreement. The European Parliament will be intimately involved and it would be wrong for us to think that those discussions do not matter. They matter a great deal to the fine detail of the final budget arrangement.
	We must also recognise that the European Parliament has real powers these days. The co-decision procedure gives it real influence on EU legislation, so it is all the more remarkable for the Leader of the Opposition to suggest that his 27 MEPs should neuter themselves, in effect, by leaving the European People's party, and so consign themselves to political oblivion in the European Parliament.
	I am sure that the House is fully aware that the right hon. and learned Member for Rushcliffe (Mr. Clarke) has, in his usual way, made some very trenchant remarks. However, hon. Members may not be so well aware of what some Conservative MEPs have said recently. I refer in particular to an article in this morning's edition of The Times by Caroline Jackson, who has been Conservative MEP for South West England for many years. She is a very distinguished European parliamentarian, and has chaired that Parliament's Environment, Consumer Protection and Public Health Committee with some distinction. In the article, she considers where Conservative MEPs might go on leaving the EPP, and with whom they might associate. She states that
	"so far the only possibilities may be Polish and Czech peasant nationalists, three eccentric Swedes, a French protectionist Eurosceptic and two MEPs from the Netherlands' extreme Christian party which wants to stop Sunday . . . riding."
	That says a great deal about the options facing Conservatives in the European Parliament.
	If I may, I shall give the House one other quote. It is from Mr. Edward MacMillan-Scott, a Conservative MEP who is treasurer of the Conservative group in the European Parliament. At one time, he was its leader, and he was quoted in the Daily Mail as saying:
	"I can't believe that a leader of the Conservative Party would seriously contemplate breaking the last remaining international link that the party enjoys. I negotiated an agreement with William Hague when he was leader in 1999 that we would remain associate members of the EPP. The alternatives are frankly barking."

Wayne David: With all due respect to the hon. Gentleman, this is not an academic debate; it is a debate about practical politics and practical influence. In the EU as it currently exists, power is divided between the European Commission, the European Parliament and national Governments. If we are to be truly effective in exerting our national influence, as well as changing the face of Europe, we must ensure that we exercise our influence in all those different institutions. That is the important point that we must bear in mind.
	In conclusion, it is very fortunate that we are having this sensible and constructive debate on the eve of such an important summit. I do not think that it will be the end of the world—it certainly will not be the end of the EU—if agreement is not reached on the budget. Discussions will have to continue into the Austrian presidency and, possibly, beyond. However, there is a very good chance of reaching an agreement in the next few days. I am absolutely confident that the British Government have ensured that, at the end of their presidency Europe is pulling together far more than was the case six months ago. Britain's national interest has been clearly and precisely mapped out, and the British Government have done so in such a way that is not just crudely in Britain's national interest; they have couched their arguments so that they are seen as in the interests not only of Britain but of the whole EU. That is why, on balance, I am optimistic that an agreement will be reached on the new financial perspective that will be good for Britain and good for Europe as well.

Robert Walter: Thank you, Mr. Deputy Speaker, for calling me in what is a most important debate.
	I welcome my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) back to the Front Bench. He brings considerable experience and credibility to debates on foreign affairs and a great deal of knowledge of the subjects that we are discussing. He mentioned in his speech a great deal of disappointment, which is general not only in this country but throughout Europe, at the lack of any real achievement from the UK's presidency of the EU over the past five and a half months, without saying that there would be no achievement at all.
	I congratulate the Foreign Secretary and the Government on their one achievement of the presidency: the opening of negotiations with Turkey. There were times when I thought that they might be knocked off course by a number of European leaders—most notably, the President of France, Mr. Chirac—but the Foreign Secretary certainly saw his way through and negotiations were opened with Turkey. That is the right way to proceed. The Turks themselves accept that that will be a slow process.
	A few months ago, I attended a meeting with the Turkish Finance Minister, who openly said that he was looking at a minimum time scale of 10 years for the negotiation process before Turkey will become a full member of the EU, but it is right that we should be moving in that direction, as we are doing with Romania and Bulgaria. I also welcome the opening of negotiations with Croatia. A number of other states, both in the Balkans and elsewhere, are eyeing EU membership, but I want to talk, Mr. President—[Interruption.] I apologise for that slip, Mr. Deputy Speaker.
	I want to talk about another presidency that runs in parallel with the presidency of the EU, which the UK Government hold at the moment: the presidency of Western European Union. They are interrelated, because, as I said earlier, the European Commission and the European Parliament have no competence in European security and defence policy, but the WEU, which predates the EU and the European Economic Community, has such competence. The military operations of the WEU are vested in the EU and the two bodies act in parallel—a concept known as double-hatting.
	The WEU Assembly is composed of members from several national Parliaments, including ours; 18 Members of the House and the other place are full members of the Assembly and 18 are alternate members. The Assembly meets twice a year to oversee security and defence policy in the European arena. It is custom and practice that the Government holding the EU presidency come to the Assembly, in the shape of either their Foreign or Defence Minister, to answer questions and make a presentation on the achievements of the presidency in European security and defence policy.
	It was thus with great embarrassment that, at the June session of the Assembly, British members found that, although the Foreign Secretary's name appeared on the agenda, he failed to turn up as he had discovered that he had business elsewhere. Not only did he fail to turn up, but he failed to send any of his junior Ministers at the Foreign Office or a Minister from the Ministry of Defence. Instead, he sent the British ambassador in Paris to read out his speech and answer questions on it. The ambassador was extremely competent, but he is not a Minister.
	At the Assembly's most recent meeting, which took place last week, we were full of hope that, given the achievements that had been made, the Foreign Secretary would make a speech to the WEU. His name appeared on the agenda for Wednesday, but on Monday morning the agenda was changed to indicate that yet again his speech would be read by the British ambassador, as the Foreign Secretary had urgent business elsewhere. We all understood what that business was: he was trying to negotiate the budget. Again, however, a Foreign Office with six or seven Ministers, and a Ministry of Defence that probably has the same number, failed to send a substitute and the speech was read by the British ambassador.
	That was doubly embarrassing, because Austria, which takes over the EU presidency on 1 January, sent its Defence Minister, who made a speech and answered questions. The Austrians have already agreed to host a series of meetings during their presidency, to deal with European security and defence matters. The Finns, who take the presidency for the second half of the year, have agreed to do the same. Austria is not a full member of the WEU, because it is not a NATO member, so the British Government have time to make some recompense because they will continue to hold the presidency of the WEU in name for a further six months. I look forward to welcoming the Foreign Secretary to the next Assembly meeting—in Paris, in June—when no doubt he will reply to the questions that he failed to answer.
	Britain is a founder member of the WEU, so it was with some embarrassment that I discovered yesterday—I gave the Foreign Secretary prior notice that I would raise this point—that the UK had failed to pay its budget contribution to the Assembly, to meet the salaries and pensions of its staff. The amount is not enormous: €278,000 or about £190,000. I understand that this is not the first time that it has happened, but on the previous occasion on which the United Kingdom failed to pay, the Assembly secretariat was promised that it would not happen again and told that there had been an oversight. An oversight has happened again, so by the time that the Minister makes his winding-up speech, I hope that someone in the Foreign Office will have found their biro and cheque book and made the payments so that the staff of the body can be paid at the end of the year.
	We can trace back the whole concept of the European security and defence policy in its present guise to the Maastricht treaty, which quite clearly set it up as a second pillar operation, meaning that it was intergovernmental. As it is an intergovernmental arrangement, it does not involve the European Commission or the European Parliament. There might be some hon. Members who welcome the fact that those bodies are not involved, but there is scope for parliamentary scrutiny.
	I am sorry that the Foreign Secretary has left the Chamber again because I going to quote from the speech that was read for him last Wednesday—I hope that he wrote it so that he knows what I am about to cite. It is all about parliamentary scrutiny. As the hon. Member for Ilford, South (Mike Gapes), the Chairman of the Foreign Affairs Committee said, 14 military operations are taking place under the ESDP, but I am worried about the lack of accountability and scrutiny.
	The Foreign Secretary's speech last week said:
	"Scrutiny of European defence and security issues by national parliaments is essential. The WEU Parliamentary Assembly remains a unique forum to facilitate interparliamentary dialogue and discussion. The Assembly is inclusive and reaches beyond the boundaries of the EU. It continues to offer an important link between EU citizens and governments in security and defence—vital issues our citizens care deeply about".
	If the Assembly is to provide that link between Governments and the people, we must bear it in mind that the Foreign Secretary is presently the representative of those Governments as the holder of the presidency of the WEU.
	The Western European Union—I will not go on about this ad infinitum—dates back to the 1948 Brussels treaty, which was why I said that it predates the European Community and the European Union. The Assembly was established in 1954 under the modified Brussels treaty and it had its first meeting a year later.

Elfyn Llwyd: Perhaps it is a perverse system, as the hon. Member for Rhondda (Chris Bryant) comments from a sedentary position, but there we go.
	As I have said, the Government have stated six objectives, and I have referred to what the Financial Secretary said. We really must impress on the Government the need to ensure that objective 1 funding remains available for west Wales and the valleys—I am trying not to be parochial, but the fact is that the area qualifies in any event.
	The 1 per cent. ceiling, which was put forward in a joint letter on behalf of the Governments of the UK, France, Germany, Sweden, Netherlands and Austria in December 2003, is important, but the recent EU enlargement, as we know, has increased the EU population by about 30 per cent. but its total GDP by only 5 per cent. That is the pressure with regard to assisting those who are most in need. That implies further pressure to raise EU expenditure as a percentage of EU GDP. The number of farmers, as we know, has increased by 50 per cent.
	There are problems in the European Union—I am not saying that everything is hunky-dory—such as not signing off the accounts. I accept that. There are also problems from the UK Government perspective. The Court of Auditors has referred to the UK's persistent errors in transactions, failure to comply with regulatory requirements, delay in closing the 1994–99 structural programmes and poor forecasting of expenditure. Those are genuine problems that need to be sorted out.
	All of a sudden, we have arrived at the 11th hour of the UK presidency. It is as if Christmas has leapt up on us, but we knew Christmas was coming six months ago. The Prime Minister is having great difficulty in settling the budget, and I am not altogether surprised. There has been some handbagging and some megaphone diplomacy. It seems to me that the last thing that one would do to the French and Germans is to say that one is going to do away with the CAP—any fool can see that that will not engender any assistance from them. Equally, grandstanding on the Fontainebleau rebate, which has been a thorn in our partners' sides for some time, will not engender any co-operation either. We are now at the last hour, however, and we must find some way forward. If we do not do so, the structural funds to which I refer seemingly disappear. Among other areas of the UK, west Wales and the valleys will certainly suffer.
	The Government have been a little lax. It appears that four months of inaction have led to some bad drafting that has been rejected by all but Malta. They are only a few days away from the discussions and apparently nowhere near a deal.
	I am also concerned about the low level of the budget and funding for structural funds. The Commission's proposal is €336 billion, Luxembourg's is €306 billion, while the UK's proposal is €296 billion. That means that, whatever happens, in any event, there will be less money available for structural funds within the UK. Added to that is the problem of a funding gap because of a late decision. Many projects in the west Wales and valleys region are dependent on European funding, and those involved do not know at this stage what will happen. If there is no decision, some form of alternative money will have to be found, or the schemes will have to be wound up. If there is no decision this week, and we lose out on convergence, will the Government support statistical effect status, and will they guarantee to make up the shortfall in funding caused by the delay and their late and possibly bad negotiating? Will they guarantee that match funding will be provided?
	New GDP figures are due from Eurostat in January. That means that if the budget is not agreed at this week's summit, some areas may not qualify. The new figures may show that the GDP of west Wales and the valleys is marginally above the EU per capita average of 75 per cent. I understand that the Minister for Industry and the Regions has said that if west Wales and the valleys qualifies, Wales as a whole will receive roughly what it receives now from the EU, but if it fails to qualify Wales will receive only about two thirds of what it receives now.
	I should like the Minister to consider whether objective 1 money could be spent on housing. The UK presidency apparently proposes such spending for the 10 new EU states, but rules it out for us. Will the Minister tell us where is the logic in that?
	West Wales and the valleys is a large and vital part of Wales. The position has improved—it would be wrong of me to say otherwise—but there is still much work to be done. Concern about the loss of structural funds is widespread, as has been made clear in yesterday's and today's press in Wales. We are told, for instance, that
	"Welsh MEP Eluned Morgan, on a whirlwind tour of north west Wales"
	—presumably she flew over it—said
	"This December meeting is critical because it stands the best chance of getting the best deal for Wales."
	In fact, it is the last chance. It would be a disaster if we failed to hang on to the money.
	I will not labour the point, but I felt that it was important to make it as strongly as I could. Others—in local government, for example—have expressed concern. Denbighshire county council's European officer has said that up to 250 council jobs could be lost if the budget talks fail. There is a similar story from Ynys Môn county council and from Sheila Potter, Conwy county council's head of regeneration. If we do not retain our designation, Wales is in danger of losing about £1bn over the next seven years. More important, there is a distinct possibility of our losing convergence status over the following seven years, which would have even more dire consequences for us.
	The Foreign Secretary said that my point about objective 1 would be responded to by the Minister for the Middle East. Will the Minister answer this question as well? Some 10 years ago, my party and I referred to all the jollity surrounding where the Conservatives might or might not be sitting in the European Parliament. At the time, my party sat with the European Free Alliance. We discovered a rather unsavoury character there—indeed, a bunch of them—and left the group within a week or so. The Minister discovered that, and sent out a very nasty press release calling Plaid Cymru all kinds of things for having sat with the "nasties", albeit for only a few days. The "nasty" concerned was Silvio Berlusconi. May I ask the Minister what advice he gives the Prime Minister when the Prime Minister holidays in the home of Silvio Berlusconi?

Chris Bryant: As the hon. Gentleman suggests, Cornwall is another example. Only by sharing prosperity around Europe will we stand a chance of creating a just and fair EU.
	The question is whether repatriating large amounts of structural funds would open the door to a vast expansion of inappropriate state aid in the eastern bloc, in those countries that have joined the EU most recently, and in those that intend to do so in the future. My worry is that any extension of state aid in Poland and Hungary would not be in the interest of the south Wales valleys, as the competition would be entirely unfair and unsustainable. Again, we want to maintain a structural funds system that brings money not only to the poorest countries but to some of the richest countries.
	That takes me to the UK abatement, which, of course, like many aspects of the budget, is not as simple as it sounds. I would guess that most of my constituents, in so far as they know about the abatement at all, would presume that it is a fixed amount of money that we get back every year—that we get a cheque for £2 billion or £3 billion, or whatever, every year. Of course, the abatement is far more complicated than that, because of several determining factors. It is proportional to 66 per cent. of the net contributions in the previous year. Of course, net contributions cannot be finally adducted until four years after the year in question, because we do not know precisely what the expenditure will have been in each member state and, consequently, we cannot know what each member state's net contribution will have been. Also most people will not realise that, by definition, our abatement will therefore rise and may frequently fluctuate. Over the past few years, it has fluctuated between €5.2 billion and €5.7 billion a year.
	People might also think that the system is straightforward in that we get some money back and everyone else pays a little bit extra. Broadly speaking, that is true, except that it is not entirely true, because Germany, the Netherlands, Sweden and Austria pay only a quarter of the extra share of our abatement. France and Italy pay nearly half of our abatement. Of course, that might explain the major problem that we have in negotiations with France. There is a row not just about the CAP and the UK abatement, but about the fact that France and Italy between them effectively pay half our abatement—notwithstanding the fact that, as the hon. Member for Wellingborough (Mr. Bone) mentioned earlier, France is not one of the larger contributors to the EU, because of its receipts under the CAP and structural funds. Nevertheless, politicians—especially President Chirac, who is wanted for a third term by a mere 1 per cent. of his country's population and is not particularly popular—obviously have an opportunity to play to their home market and perhaps to fight unfairly.
	Given the way that the abatement is structured, the new 10 countries will pay €290 million of our abatement this year. If there were no UK abatement, France's net contribution would therefore be a mere €1.6 billion and ours would be €9.9 billion. So it is right—indeed, it is entirely ethically and morally justifiable—that the Government should hold to the idea that the UK abatement must continue, but I disagree with some people because I do not believe that the structure of the abatement can remain exactly as it is today. First, it places a particular emphasis on some nations, not on others. Secondly, it places a requirement on new member states—some of the poorest in the EU—to contribute towards our UK abatement, which can only lead to resentment against the UK among those members states' populations. That cannot be in our long-term political interests.
	We were the country—I include hon. Members on both sides of the House—that argued most forcefully for the enlargement of the EU. The right hon. Member for Richmond, Yorks (Mr. Hague) said that we should provide a hearty welcome for the new members of the EU. I do not think that that means that we can invite them to dinner, sit them down at the table and say, "Sorry, we all just had Christmas dinner, but you're now going to have mulligatawny soup." We must be able to provide a clear sense that the welcome is met by the financial requirements that must surely fall on us.
	I believe that there should be a principled rebate. We should welcome the new members and pay our fair share. As I told the hon. Member for Wellingborough, the major, prosperous nations should pay in proportion to one another. That is what we should strive to achieve, because the biggest irony of our situation is that, as I said earlier, given the present structure of finance, rich countries with poor areas do best. Repatriation of agricultural and structural funds might be possible under some form of co-financing, but the last thing we want is a free-for-all.
	I want to stray slightly into the area of how the House carries out European business. We hold debates such as this regularly and the speeches are more or less interesting, but we are poor at scrutinising the process of European legislation coming into UK law. For the most part, we undertake it through statutory instrument, or secondary legislation, which is debated—I use the word generously—for an hour and a half at most in Committee, with no opportunity to amend. That provides us with only scant understanding of how the EU genuinely affects us.
	We tend to consider that European policy is always part of foreign policy, whereas in fact it is largely part of domestic policy. Sometime today, the Government will probably finally agree an artists resale right for the UK, to meet our obligations under the directive passed last year, which we have to put in place by 1 January 2006—we shall have to proceed at quite a pace to do that. When the matter is eventually debated, it will be for only an hour and a half upstairs, even though it is remarkably controversial for some people. To my mind, it is a great progressive measure that will enable many UK artists who struggle on a remarkably small amount of money to retain some of the value of their reward.

Chris Bryant: Indeed. There is certainly a lot of legislation but there is plenty of opportunity to debate it. Unfortunately, remarkably few of us attend the debates. We need a halfway house between the full legislative process that we undertake for UK-originated Bills and the one and a half hour statutory instrument procedure that allows no amendment and no great degree of debate.
	We need an opportunity for Ministers who attend Council meetings to report back. While I worked in Brussels for the BBC, the number of times that Ministers agreed something that was never reported in their country was extraordinary. We do not need an oral statement every time a Minister has attended a Council, but a written statement should be made to the relevant Committee after each Council meeting.
	Furthermore, there should be a specified period for Europe questions—

Chris Bryant: The hon. Gentleman agrees; he wants his hour in the sun, and I am sure he would be well tanned by the end of it.
	A Europe Question Time would be an important part of the accountability process for our membership of the EU. One of the difficulties is that, due to the ballot, there is all too often no question on the EU from month to month in Foreign and Commonwealth questions.
	I do not want to intrude too much on private grief in the Conservative party, but I am perplexed that a party with a certain degree of respect in the European Parliament and certain positions of responsibility, including a vice-presidency, a quaestorship and various committee responsibilities, should choose to walk away from every element of influence that it enjoys. That is a matter of concern not only for the Conservative party but for the whole country, because, for instance, before a summit there is normally a meeting, organised by political grouping, of Opposition leaders. I would have thought that a leader of the Conservative party—the Leader of Her Majesty's loyal Opposition—would want to meet other people in his political grouping, such as the new Chancellor of Germany. By leaving the European People's party, it is almost certain that the Conservative party will lose influence for not only itself, but this country.
	I hope that the hon. Member for Witney (Mr. Cameron)—or the right hon. Member, if he has become a member of the Privy Council yet—understands the system whereby groupings are organised in the European Parliament, although I wonder whether he does. If he does not, he might like to know that an alliance must be formed with at least 19 Members from at least five countries, because otherwise a party's Members stand no chance of being a rapporteur on a Committee, of being a Committee Chair or deputy Chair, or of getting the opportunity to speak for more than one minute in the European Parliament at any one time. All that will be impossible unless he can find new people to join him.
	I have looked through the list of non-attached Members of the European Parliament. It includes Philip Claeys, Koenraad Dillen and Frank Vanhecke. They are all from Belgium and are members of Vlaams Belang. In case anyone is uncertain about what that party is, it is the renamed Vlaams Blok party, which was condemned by the Belgian Government for being fascist and originally founded to ensure that there was an amnesty for former members of the SS. That party is one possibly ally.
	Another individual is Jana Bobouková, who is from the Czech Republic. There are plenty of French MEPs: Bruno Gollnisch, Carl Lang, Fernand Le Rachinel, Jean-Claude Martinez and Lydia Schenardi. Of course, the two most famous members of that group are Jean-Marie Le Pen and Marine Le Pen. Those people are members of the Front National.
	Italy is even better. Its MEPs include Alessandro Battilocchio, Gianni De Michelis, Gianni Rivera, Luca Romagnoli and Alessandra Mussolini. That is great because the Conservatives will have a choice between the fascists and the communists, which is a delight. It is always difficult to talk about Austrian politics without mentioning Jörg Haider's old party, but the two possible Austrian candidates for supporting the Conservatives' new grouping are Andreas Mölzer and Hans-Peter Martin. Of course, there are four Polish Members representing the Polish Peasant party, none of whose names I will be able to read out.
	Finally, and perhaps most importantly, the Conservatives might want to combine with other British Members of the European Parliament. There is Ashley Mote, who represents the UK Independence party. There is James Hugh Allister, who represents the Democratic Unionist party—[Interruption.] They have one ally. There is also Roger Helmer, but the Conservatives might have difficulty getting him on board as they only lost him just last year. Finally, there is Robert Kilroy-Silk. It says on my list that he represents the UK Independence party, but I think that that is somewhat out of date.
	In a sense, I beg the Conservative party to reconsider its position on the issue for the simple reason that it will do its own future no good. This is not a caring Conservative party, but the most ideologically driven Conservative party that we have yet seen.

David Gauke: I thank the hon. Member for Rhondda (Chris Bryant) for his kind thoughts about the Conservative party, even though I did not agree with a word of it—[Interruption.] He was kind to address matters affecting the Conservative party, but we have more important issues to talk about today.
	Following the defeat of the European constitution through referendums in the Netherlands and France, there was an opportunity for Europe to readdress fundamental issues. The Government talked about a pause for reflection, but there has been no adjustment to the European model and no change. The European model continues in an integrationist manner. I wish to attend to one specific aspect of that with regard to criminal justice. We live in a world of consensus politics these days. We can probably find a consensus in the House and in the country on criminal justice. I think that we all believe that criminal offences that are committed in the UK should be defined by the House. Presumably, we believe that criminal penalties should be determined by the House and the UK courts. I hope that no one takes that to be an extreme or unrepresentative view. I hope that even the hon. Member for Rhondda supports the view that criminal justice and the determination of crimes and penalties should be a matter for UK institutions. The Government recognise that that is the case.
	In a debate last week in a European Standing Committee, the Under-Secretary of State for the Home Department, the hon. Member for Wythenshawe and Sale, East (Mr. Goggins) was clear on the matter, and I will quote him. He said:
	"It would be completely unacceptable for the operation of the criminal law in this country to be determined in Brussels or anywhere else."
	When pressed further, he said:
	"I am happy to reinforce the fact that changes to criminal law are a matter for this Parliament."
	I pressed him on concern about approximation of criminal laws. "Approximation of criminal laws" was the wording used in the European constitution. Despite the fact that that constitution is not proceeding, it appears that the European Commission is working on the basis that "approximation of criminal laws" is the correct approach. I asked the Minister whether this would mean that we would all have to follow particular European crimes, if Europe and other member states determined what a crime should be. Again, he was clear. He said:
	"I can visualise a situation where the United Kingdom might find itself in a minority of one but would still hold on to the view that criminal law is a matter for this Parliament. Whatever views are held by different hon. Members or different political parties, we should be able to hold a common view about that."—[Official Report, European Standing Committee C, 8 December 2005, c. 12–13.]
	I think that we have a consensus on this subject.
	We must have regard, however, to a European Court of Justice decision of 13 September. I shall provide a little background. The Commission adopted a proposal for a directive on the protection of the environment through criminal law. The Council of Ministers refused to adopt it. Eleven of the 15 member states claimed that the Community could not prescribe criminal penalties and instead adopted a framework decision. The Commission appealed to the European Court of Justice, which, as I have said, reached its determination on 13 September. The ECJ concluded that because environmental law is a first pillar matter, the imposition of criminal sanctions is a matter for the Commission and the Council of Ministers, acting sometimes through qualified majority voting and the European Parliament.
	The logic is that that approach should apply not only to environmental law but to other matters where the EU has power to legislate. That would include single markets, consumer protection and cross-border mobility. It has been suggested by some analysts in this area that criminal procedure should also fall within the European Community's ambit if it relates to a first pillar matter.
	On 23 November, the Commission issued its communication on its view of the ECJ judgment. It states that the judgment of 13 September recognises
	"the exclusive competence of the Community to adopt criminal law measures to ensure the effectiveness of Community law."
	It states also that the scope of the judgment
	"exceeds by far the field of the environment taking the whole range of community policies."
	It proposes not only to change the basis of legislation relating to environmental law, to scrap the framework decision and to change the bringing in of a directive, but to provide directives to cover areas such as money laundering, computer-related crimes, maritime pollution, corruption, human trafficking and euro and bankcard counterfeiting. That runs counter to the Government position that criminal law is a matter for the British Parliament. When I pressed the Minister in Committee on the matter, he was less certain than he had been about the position on criminal law and Europe, saying that
	"member states will have to consider it and come to their own conclusions. We are currently doing so."
	That was three months after the judgment. He went on to say that
	"we . . . wish that the ECJ had not taken the course that it did. We reflected very carefully about the consequences of that, and we retain very strongly the view that criminal offences and sanctions should be a matter for member states."—[Official Report, European Standing Committee C, 8 December 2005; c. 13–15.]
	That is the Government position. The British Parliament and all parties represented at Westminster believe that we should have exclusive power to determine and define criminal offences and the appropriate penalties. The European Commission thinks differently. That is not the case in general—the Commission is not arguing that it has the right to act in every area of criminal law, solely in substantial areas that fall under the first pillar does it believe that it has that right.
	The European Court of Justice agrees with the Commission, and there is nothing—if I am wrong, I would be grateful if the Minister would correct me—that we can do about that. The Commission's view has been confirmed by the ECJ and, in areas that fall under the first pillar, including European Community law, it is the exclusive right of the European institutions to lay down what the criminal law is, even though some of those areas are subject to qualified majority voting. Astonishingly, someone in this country can be convicted of a crime that has not been determined by the democratically elected Chamber but by European institutions. The penalties that apply will not be determined in the UK but in Brussels.
	That substantial constitutional change has taken place without a vote—there has certainly not been one in this country—or a debate, which is why I am keen to raise it today, and despite the fact that European integration, on almost every test, is unpopular and unsupported by the populations of the Netherlands and France. If a referendum on the European constitution were ever held in Britain, it would no doubt be defeated. There has been a substantial grab of power by the EU in the few months since the House last debated European matters. That has taken place almost unnoticed but, increasingly, criminal law is becoming a matter for Europe, not the British Parliament. That is consistent with the general direction that Europe is taking.
	Realistically, the constitution will not be ratified, but steps have still been taken to increase integration. We oppose the establishment of the post of European public prosecutor—I am grateful that the Government have made their position clear—but steps have none the less been taken at the European level to develop the proposal. There is a host of other areas in which similar action is under way, but I am grateful for the opportunity to highlight to the House a specific and important constitutional matter that has been changed without any democratic accountability whatsoever.

Kelvin Hopkins: I agree. Perhaps democratic local government could have more of a say. In general, it is better for decisions to be made closer to where people live and where the funding is to be spent. Funding coming from the British Government rather than the EU would be better spent, and there is a parallel in the aid budget for the rest of the world. The Department for International Development does a much better job than the EU. If more funding went through DFID and less through the EU, the people who benefit would benefit more.
	I take issue with the hon. Member for Meirionnydd Nant Conwy on another point. He spoke about handbagging, as though we had started the argument that has caused the impasse in the budget. To go back to the politics of it, if he remembers, following the victory of the French people in their referendum—I put it that way because that is the way I see it—it was the French President who immediately wanted to deflect attention from what he saw as his failure by attacking the British rebate. He raised the issue.
	Shortly afterwards, I suggested in my modest way in a debate in the Chamber that, if the French President wanted to open the question of our rebate, we should open the question of the CAP. If there were no CAP, there would be no need for a rebate. I do not suppose that the Prime Minister listens very much to what I say, but he took up the same theme not four or five days later, and I am very pleased about that. He put together a reasonable argument, but the handbag was first raised by the President of France, not by Britain.
	We must appreciate that the problems arise entirely from the CAP. It is time to consider a way of abandoning the CAP and to state our intent to get rid of it over a period, in a sensible and negotiated way, not in a big bang.

Kelvin Hopkins: My hon. Friend took the words out of my mouth. I was about to suggest a five-year phasing period. We heard a sensible suggestion from the right hon. and learned Member for North-East Fife (Sir Menzies Campbell), who spoke about co-financing, whereby some subsidy comes from national Governments and some from the common agricultural policy. If that was phased in, it would reduce the level of the CAP by 20 per cent. a year over a five-year period and replace it as national Governments choose with national funding. We could adopt a phased, sensible approach and we might even persuade countries not to take actions that were unacceptable and that had damaging effects on the outside world.
	Much of the argument today has been made by hon. Members who would normally be the free traders—people who believe in economic liberalism. I do not share their view that the CAP is an instrument of economic liberalism and free trade and helps the third world. Even socialists have argued that. I do not believe that to be the case. If agricultural policy were repatriated, perhaps in a phased way, we could persuade individual countries, and certainly our own country, to reduce the level of overall subsidies to agriculture.
	At the same time, I do not think it politically feasible to suggest that others should abandon subsidising their own agriculture, which is fundamental to the culture and economy in some countries. One cannot say to the French, "Get rid of all subsidies and go for free trade in agriculture", because the effect would be politically devastating. We cannot expect the French to do that, because we would not withdraw selected subsidies from our own agriculture. I keep mentioning Welsh hill farmers—I hope this goes down well with Welsh Members—who are part of our culture. Small-scale livestock farming is beneficial to the countryside, and if a degree of subsidy is appropriate, let us proceed with that policy.
	Sometimes countries want to maintain a degree of agriculture for strategic reasons. The Czech Republic used to be able feed itself, but since it has joined the European Union, it cannot do so, which is upsetting.

Kelvin Hopkins: If we were to use it as a biofuel rather than dumping it on Malawi, I would be very pleased. Selling cheap subsidised sugar to the Malawians is not the way to proceed, when they can produce sugar themselves.
	I want briefly to discuss the effects of the CAP by considering EU agricultural spending per head in member states with comparable living standards to our own: in Ireland, agricultural spending—these are rough figures and might be out by a few euros here or there—amounted to €460 per head of population in 2004; in Denmark, the figure was €275; in France, €160; and in Britain, €65. Ireland, which has a similar standard of living to our own, has seven times the subsidy per head for agriculture; Denmark, which is a richer country than Britain, has four times as much subsidy; and France, a big country which is comparable to Britain, has two and a half times as much subsidy. The position on subsidies is nonsense.
	I agree with those hon. Members who have argued that we should provide more for the newer member states and if any redistribution takes place, it should be towards them and not the richer western European nations. If we compare the subsidy per head in Spain and Poland, which have similar populations but different living standards—Spain is considerably richer than Poland—Spain spends €150 per head and Poland spends €15 per head, which means that spending differs by a factor of 10.
	Hon. Members have discussed structural funding and I have examined the structural funding tables for 2004. The Spanish get 10 times more in structural funds than the Poles. I know that such funding is phased over a period. We keep saying that we want to be generous to those countries, but we are not being generous, and the fault lies with the CAP.
	Britain is being guilt-tripped about our rebate, which is justified on the basis that we are the least favoured by the CAP among the western European nations. The problem is not our rebate but the CAP. If we were to get rid of the CAP tomorrow, reduce contributions accordingly and repatriate spending, we could examine what we need to do and allow the situation to settle down. In that case, the budget would be more understandable, which would allow us to adjust it to make sure that poor nations receive according to their living standards and that we give according to our wealth.
	We should not accept any accusations of guilt from the big beneficiaries of the CAP and we should not back off. I am glad that my right hon. Friend the Foreign Secretary is negotiating for us, because I have great confidence in him. I am pleased that he is batting for Britain on this very sticky wicket. I am not sure that members of the Commission understand cricketing metaphors—if they played cricket, we might get a bit further. My right hon. Friend is doing the best job in difficult circumstances. I hope that he will emphasise that the main issue is not our rebate but the CAP. If we want to help the poorer nations more, we can, but first we have to deal with the CAP.
	We must move towards an EU budget—I have said this many times before in these debates—that is fair and equitable according to the living standards in the different member states, which means that the rich give most and the poor receive most. That is completely screwed up by one simple fact—the existence and operation of the CAP. I urge my Front-Bench colleagues to consider how to move away from the CAP and towards a more sensible approach to agriculture.
	Many people argue that, if we got rid of the CAP, member states would subsidise their agriculture even more and we would have a worse problem. I do not think that that would happen, because a Government's own taxpayers would have to bear the cost of the subsidies and they would be under pressure not to spend too much and to reduce those subsidies. At the moment, they are spending other people's money—largely British money, in fact. It is always easier to spend other people's money than one's own. In Britain, we would stop subsidising Tate and Lyle to the tune of nearly €200 million a year—a ridiculous amount. We would also stop subsidising some of the very wealthy farmers—the landed gentry who in the past were represented by Conservative Members. Indeed, royalty, including the Duchy of Cornwall, gets these subsidies. If we did that, other countries might do the same, especially if we appealed to them to play their part in helping the world's poor to find their way forward.
	I would go further. I am not automatically a free trader. If a poor country wanted to restrict imports of subsidised agricultural products from countries such as France, we should let them do so in order to protect their own farmers. Simple free trade and forcing them to open their markets to our goods will not help them in any way. There are two sorts of protectionism—by the rich to help themselves and by the poor to ensure that they have a chance in this difficult and competitive world.

Graham Brady: As ever, we have had an interesting and wide-ranging debate. I am pleased to follow the hon. Member for Llanelli (Nia Griffith), not least because she managed to squeeze so much into three minutes, and I am sure that there would have been much more had she had more time. Llanelli, of course, has produced many great parliamentarians, not least my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard).
	Earlier, we heard from the right hon. and learned Member for North-East Fife (Sir Menzies Campbell), who endorsed our position that the rebate should only be negotiated in return for CAP reform. He raised the prospect of reform of the CAP to return its funding streams to national Governments. That view was later endorsed by the hon. Member for Luton, North (Kelvin Hopkins), whose contributions to these debates the Opposition very much value, although we do not always agree with everything that he says. I know that he is reassured by that.
	The hon. Member for Leicester, East (Keith Vaz), a former Minister for Europe, spoke about the Foreign Secretary's panache and charm and about having voted for him in The House Magazine awards. We were privileged to hear what might well be his last intervention from the Back Benches. He is clearly working very hard to return to his earlier brief, although he is currently looking after the Westminster kids' club party, where I would have been were I not in the Chamber, as one of the co-hosts.
	The Foreign Secretary advised Members to back a horse rather than putting money on his chances of success in the budget negotiations. Some Members may find that a bit rich, given the Foreign Secretary's own readiness to gamble £6 billion of British taxpayers' money this week in the European Council.
	My hon. Friend the Member for Stone (Mr. Cash) said that enlargement would inevitably lead to a looser, freer European Union. My hon. Friend the Member for Wellingborough (Mr. Bone) spoke passionately on behalf of his constituents, particularly the younger ones—notably one Thomas Bone. He put the case for much wider free trade, bringing in countries outside the EU. We strongly endorse that.
	My right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) rightly reminded us that for 11 years the European Court of Auditors has refused to sign off the EU's accounts. My hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) spoke of the way in which the EU is extending its influence and powers even without the constitution that was rejected earlier in the year. My hon. Friend the Member for North Dorset (Mr. Walter) expressed concern about the failure of the British presidency to make itself accountable to the Assembly of the Western European Union, not once but twice. He also issued a plea for the small but necessary funding in that regard. I am sure that the Minister will sign a cheque as soon as he leaves the Chamber.
	The hon. Member for Preston (Mr. Hendrick) produced the astonishing revelation that he still believes that Britain will join the eurozone. We hoped that he would go on to tell us what he expected Father Christmas to bring him shortly, but sadly he left us in suspense.
	Opening the debate, my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) was the living embodiment of the new politics. [Hon. Members: "Where is he?"] He will be back shortly. The winding-up speeches began slightly earlier than expected.
	My right hon. Friend warmly congratulated the Foreign Secretary on the opening of Turkish accession talks, and I am delighted to echo his tribute. [Hon. Members: "Here he is!"] As ever, my right hon. Friend is on time. It is just that we started a little early.
	Not only will Turkey's eventual EU membership bring benefits; the process of reform and development that will precede it is important, and the Minister and the Foreign Secretary can be proud of their role in that process. I suspect that they will also be relieved: relieved that, whatever may happen over the next few days, there will be at least something to show for the six months of the British presidency. It is all too clear that, to date, no one in the European Union is terribly impressed by anything else that they have done.
	There is too much relevant material for me to quote from all of it, but I shall cite one or two of the comments that have been made. The French Minister for European Affairs recently said:
	"Five months have passed and there is still no proposal likely to shape an agreement. There is not even a proposal setting out figures. Many delegations were surprised by this method of conducting budget negotiations."
	The Belgian Foreign Minister was quoted by diplomats as saying:
	"We are sitting here wasting our time."
	The Portuguese Foreign Minister said:
	"They have done nothing about the financial prospects . . . We are not going to get any numbers today, just words."
	One Brussels civil servant is quoted as saying:
	"the British presidency—you don't see it, you don't feel it, it's very curious".
	Mr. Marco Incerti, an EU expert at the Centre for European Policy Studies, said:
	"the famous speech by Tony Blair raised expectations, but those that criticised Blair for just saying nice words are being proved right".
	That was reported in The Times on 22 September.
	The last comment, from Mr. Incerti, hits home hardest. As was pointed out by my right hon. Friend the Member for Richmond, Yorks, our EU partners have learnt something about the Prime Minister and his Government over the past six months—something that it has taken the British people much longer, with far more pain, to discover. They have seen the dramatic difference between the fine words and high aspirations in the Prime Minister's speeches and his dismal record of underachievement, lack of delivery and lack of direction.
	It all started so well. On 23 June, the Prime Minister told the European Parliament:
	"Just reflect. The Laeken Declaration which launched the Constitution was designed 'to bring Europe closer to the people'. Did it? The Lisbon agenda was launched in the year 2000 with the ambition of making Europe 'the most competitive place to do business in the world by 2010'. We are half way through that period. Has it succeeded? I have sat through Council Conclusions after Council Conclusions describing how we are 'reconnecting Europe to the people'. Are we? It is time to give ourselves a reality check. To receive the wake-up call. The people are blowing the trumpets round the city walls. Are we listening?"
	That wake-up call came in June with the referendums in France and the Netherlands. But six months on, the British Government show every sign of having overslept. Instead of replacing the crisis of political leadership with a real vision and a new direction—a move towards a more flexible European Union—we have had six months of business as usual. We have had the same old arguments, the same resort to horse-trading and the quest for a deal that makes everyone equally unhappy.
	In recent weeks, we saw the undignified spectacle of the Prime Minister engaged in what Bronwyn Maddox of The Times described as a
	"doomed last-gasp diplomatic mission"
	to find a friend somewhere in eastern Europe. We should note the danger of agreeing to what the right hon. Member for Rotherham (Mr. MacShane)—sadly, he is not with us today—described to The Daily Telegraph as
	"a one-sided deal that even out-and-out pro-Europeans like me would find it hard to support."

Graham Brady: I am grateful to my hon. Friend and I look forward to further more detailed conversations with him on that subject.
	Here lies the real tragedy of this EU presidency. It is not that Conservative Members regard it as a failure or that the Government have damaged their relationships with so many EU partners; the real tragedy is that they have failed to live up to their own laudable objectives. If, following the rejection of the constitution, there was a crisis of political leadership in Europe, it is worse now. If there was a pressing need for economic reforms, it is even more pressing six months on. If there was an overwhelming need for fundamental reform of the CAP in June, the need for a better world trade deal makes the case even stronger today.
	It was notable that even the Foreign Secretary made little effort to claim that the presidency has been a great success. We are keen on political consensus, but we are sorry to see the firm consensus developing around Europe—that the British presidency has been a failure. It may be that no deal is achieved on the budget this week. If that is so, the Government will have squandered reserves of good will for nothing. If, however, a deal is done, it looks increasingly as though it will be the worst of all possible worlds—bad for the new member states, no reform of the CAP and billions more being taken from British taxpayers.
	We agreed with so many of the objectives set out in June, so it is with real sadness that we move towards the end of this British presidency with no real prospect of agreement on the key challenges facing Britain and the European Union.

Kim Howells: I have almost no time. I will to try acknowledge something that the right hon. Gentleman said earlier.
	The right hon. and learned Member for North-East Fife raised, as he put it, the lack of substantial achievement during our presidency. He spoke, quite properly, of course, of geopolitics, the new power across the globe—as did my hon. Friend the Member for Ilford, South (Mike Gapes), who is absent from his seat—and the rising economic and political power of China and India.
	Other Members drew our attention to one of the basic notions that drove forward the growth of the EU, and which I am old enough to remember: there were two great poles of influence—America in the west and Japan in the east—and we would be competing with those great powers. There are at least four great powers now. There is no question but that India and China will be very different powers. The right hon. and learned Member for North-East Fife drew our attention to the important point that they will be great political powers. How should we come to terms with them? How do we begin to compete, for example in research and development? How do we pool together for the great projects in which we shall certainly need to be involved? Whether in communications or science-based industries, there are big questions and I am sorry that we have not had time to discuss them. They are at the core of what we should be doing in the EU from here on, which returns to the point made by the right hon. Member for Richmond, Yorks about the Lisbon agenda. We need to concentrate hard on that. If we want a mission, there it is.
	I am about to contradict myself. Members spoke about the great single market inside Europe, but in fact it has by no means been completed. I come from the energy sector—try selling electricity to the French, although I would not wish to name a country. Sure enough, the market has been pushed forward, even more starkly so for financial services. In the UK, we excel in financial services and if we were let loose on many of the still highly protected markets in many European countries we would create many more jobs in this country, making economies abroad much more efficient and growing those markets. We must certainly take that forward. The single market in services has only just been completed and the implementation is only just beginning in many countries. We need to consider that.
	My hon. Friend the Member for City of York (Hugh Bayley) raised an important issue. We have been talking in that special euro language, to which the hon. Member for Stone (Mr. Cash) and I have listened so many times. My hon. Friend the Minister for Europe is not in the Chamber; he speaks that special euro language—the problem is that half the time I do not understand a word of it. My hon. Friend the Member for City of York said, in effect, "Hang on a minute. Actually lots of money has been allocated to the new economies in the east but they can't spend it." They cannot spend it because they do not yet have the governance capacity to do so.
	The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), who is a friend of mine, knows that in its first year the Welsh Assembly was paralysed by arguments about how the European structural and cohesion funding should be spent. That was a difficult issue. The point is important: we are dealing with a great continent where people are at different stages and there are problems of underdevelopment. We must remember that and make careful judgments.
	The right hon. Member for Wells (Mr. Heathcoat-Amory) and the hon. Member for Stone made challenging, thoughtful speeches. The hon. Gentleman said something that was reflected in the words of my hon. Friend the Member for Luton, North (Kelvin Hopkins). He said that we might not be seeing seismic shifts, but that there were shifts in the sand and we were talking a much more pragmatic language. I, too, sensed that during the debate. I was extremely interested, for example, in the idea that we should look at how institutions respond to the great challenges that have been mentioned—whether the growth and influence of China and India or our ability to compete in big international markets. We have to ensure that the institutions evolve to meet those challenges.
	The hon. Member for Altrincham and Sale, West is an excellent parliamentarian and debater, but my hon. Friend the Member for City of York put his finger on something when he asked the hon. Gentleman what the Conservatives would have done. What did the hon. Gentleman say? He said that they would have stuck to the Government's policy. That is pathetic. That is the same ancient whinge about the EU—that is all. Look at all the years the Conservatives were in power. What did they do about reforming—
	It being Seven o'clock, the motion for the Adjournment of the House lapsed, without Question put.

John Stanley: I am grateful to my hon. Friend for his intervention, and I am sure the Minister will respond to the point, if he can.
	I make one last point to the Minister on service provision. I welcome one decision that the Government have made. They have rightly intervened on the drastic reductions in ticket office opening hours that South Eastern Trains, the outgoing franchisee, put out to consultation earlier this year. I was glad to see, buried in note 5 to editors at the end of the Department for Transport's stock market statement on 30 November, the following wording:
	"It is appropriate for the new franchisee to have the opportunity to review proposals on changes to ticket office hours on the SET network. It is expected that discussions among interested parties will take place in due course."
	I am grateful for that intervention by the Government, but when will the discussions take place and when will they be concluded? Can the Minister give me an assurance in reply to the debate that there will be no reductions in ticket office hours, as proposed by South Eastern Trains, until the new consultation and new review has been completed?
	Finally, the biggest single issue for my constituents in relation to the announcement that the Government made on 30 November is the implications for rail fares. Across my constituency, my constituents have been appalled at the Government's decision to allow GoVia to increase its fares by 3 per cent. above the rate of inflation for each of the first five years of the franchise.
	I refer to a small piece of history, which is relevant. There were three Conservative Members of Parliament who declined to support the last Conservative Government on the Second Reading of the rail privatisation Bill on 2 February 1993. One was the late Robert Adley, our colleague who knew more about railways, both in this country and overseas, than the rest of the House put together. Another was my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton), and the third was myself.
	I declined to support the then Government on that Bill, not because I was opposed to rail privatisation, which I support—indeed, I believe that in broad terms it has produced a more successful outcome for rail passengers than if we had gone on with nationalised British Rail—but because I was not prepared to see my constituents, many of whom have to fork out a huge sum for their annual season ticket, put into the hands of an unregulated private sector monopoly, any more than I would want them in the hands of an unregulated public sector monopoly.
	Happily, the last Conservative Government, when our former colleague Dr. Mawhinney was Secretary of State for Transport, announced on 15 May 1995 that for the three years from January 1996 to 1999 rail fares would be capped at the rate of inflation each year, and for the four years after that, from January 1999 to January 2003, rail fares would be capped at 1 per cent. below the rate of inflation in each year. That was an excellent deal from the last Conservative Government for rail travellers and for my constituents, but as that deal expired in January 2003, the present Government have provided them with a much worse deal—indeed, it is a rotten deal. a
	That situation seems set to continue under the franchise from GoVia. A fare increase of 3 per cent. above the rate of inflation for each of the first five years of the franchise means a real-terms increase of 16 per cent. over that five-year period. Unsurprisingly, the arrangement has met strong resistance from my constituents. The secretary of Tonbridge line commuters, Mr. Lionel Shields, wrote:
	"We believe that there is no justification for such draconian increases."
	The secretary of the Edenbridge and District rail travellers association, Mr. John Bigny, has also written to me:
	"The increase in rail fares at up to 3 per cent. above the rate of inflation has to be deplored. How many rail travellers are going to get increases in salary, wages and pension of 3 per cent. above inflation. A single pensioner is to get an increase of £2.20—that will be swallowed up by increased Electricity and Gas charges, let alone Council Tax."

Derek Twigg: I congratulate the right hon. Member for Tonbridge and Malling (Sir John Stanley) on securing this important Adjournment debate. The document that he mentions will become public, and when that happens I will ensure that he gets a copy. Many improvements have been agreed, and I will dwell on some of them. It would be impossible to cover all the points in the time that I have left, but I will do my best to get through them as quickly as possible.
	Let me summarise the situation before I get to the main point. I believe that the contract that my Department has secured is a tough one that will deliver good value for taxpayers and real improvements for passengers. In particular, it commits the company to introducing the high-speed commuter trains that will use the channel tunnel rail link from 2009. Journey times to London for passengers from stations such as Ramsgate and others in east Kent and the Thames Gateway will be reduced by as much as 35 minutes. It will be a commuter service unlike that seen anywhere else in the country. It will provide the flagship Olympic Javelin service that will link St. Pancras with the Olympic village in Stratford in under eight minutes. In addition, the company has committed to improving performance across the franchise. More than £70 million will be invested in passenger services. It will build on the investment that has already been made: £600 million on new trains and £93 million on infrastructure improvements to allow them to run. A further £250 million is still to be invested in the new high-speed trains.
	Let me come to some of the more specific points. From the franchise commencement date in spring 2006 until the introduction of CTRL domestic services, services will be broadly the same as now in order to avoid repeated service alterations. Once the CTRL domestic services are introduced in 2009, they will operate between London St. Pancras and Stratford International, Ebbsfleet through the Thames Gateway to the Medway towns, and to Ashford, Ramsgate and east Kent. There will be comprehensive changes to the service pattern on existing lines at the same time—December 2009—to reflect the anticipated changes in travelling patterns and to simplify and improve performance. The new service specification is intended to provide capacity where it is most needed while making the best use of existing resources within the bounds of affordability. The Government's responsibility is to make the best overall strategic decision on services on behalf of the majority of passengers and of the taxpayer. With service changes of this magnitude, it is difficult to balance the needs of all, but we believe that we have provided significant benefits for the majority of passengers.
	The reorganisation will bring many benefits. For example, 10 per cent. more trains—an increase from 171 to 188—will come into London in the morning peak, and there will be a considerable improvement in off-peak services, with the number of trains increasing from 39 to 46 every hour during the daytime. The off-peak improvements are spread between inner and outer suburban services. Key improvements include two additional trains per hour on the following lines: Bexleyheath, Orpington-Sevenoaks via Grove Park, on the Herne Hill route west of Beckenham Junction, and on the Hastings line around the Tunbridge Wells area.
	In any exercise of this kind, it is not practical to deliver every request for services, but where representations were made, and it was possible to accommodate them, changes were put in place to address the most difficult problems for local rail users. There have been several rounds of consultation, through which a number of stakeholder concerns were identified and addressed—for example, the retention of the hourly service at quieter stations on the Maidstone East route.
	The franchisee intends to provide some services before 2009, when the timetable will change, that are additional to the basic specification required by the Department. They include a strengthened half-hourly service to Beckenham Junction from Victoria, an additional peak service between Faversham and Cannon Street, two additional peak trains between Ashford and Charing Cross, and a few additional mid-evening and late evening trains to various suburban and Kent destinations from London.
	With regard to train services in the right hon. Gentleman's constituency, there will be no immediate changes on the Borough Green and Wrotham-Maidstone East line. When the CTRL domestic services begin, more frequently used stations on this route, such as Borough Green and West Malling, will benefit from additional services in the peak. However, less busy stations such as East Malling will experience some reductions. Peak services between Tonbridge and the Kent coast will experience improvements on today's service at Paddock Wood, Marden and Pluckley. Services to Staplehurst and Headcorn remain unchanged. Off-peak, Paddock Wood and Staplehurst will lose one train an hour, mainly because the two stopping services, and one fast train to London will be replaced by two semi-fast services.
	Given that the new high speed service is expected to result in a significant transfer of demand from classic services east of Ashford, the volume of residual service required to operate via Tonbridge will be reduced. The resources released will be used to enhance some services in west Kent, particularly in the Tunbridge Wells area.
	Two trains an hour to Dover all day will link that corridor to east Kent, with alternate trains continuing to Ramsgate via Deal. The journey from London to Ramsgate and Margate via Canterbury West will no longer be direct, but passengers will be able to change at Ashford to pick up connecting services either using CTRL to Margate or the Victoria to Canterbury West via Maidstone service. We expect the operator to develop a timetable providing convenient connecting timings for that. Services from Tonbridge via Redhill to Gatwick airport fall under the Brighton main line route utilisation strategy. That is currently under consideration by the Department and an announcement will be made in due course.
	Subject to rolling stock availability and operational and financial practicalities, it is open to the franchisee before 2009 to run additional services or make additional calls at stations, provided that he can demonstrate that that is worth while and that any changes can be achieved without increasing the subsidy.I urge the hon. Gentleman and local groups to work with the operator to consider the scope for such changes.
	The hon. Gentleman referred specifically to fare changes. Passengers on the new high speed trains will pay around 20 per cent. to 35 per cent. more than passengers on the classic services, depending on the journey. In general, the premium will be approximately £1 or £2 on a single fare. Passengers will be able to choose routes via CTRL on high speed services or the classic routes to south London terminals. Passengers who use CTRL domestic services will pay premium fares to reflect the enhanced service that it will provide.It is not unusual for faster rail services to be more expensive than alternative slower services. Even with the premium fare, we anticipate a high demand for the high speed services.
	The retail prices index + 3 per cent. fare increases have been made to recognise the investment that has already gone into the railway in the region, and will help keep a balance between the taxpayer and the fare-paying passenger.
	The hon. Gentleman mentioned South East trains and the press release that was issued. We believe that the new franchisee should consider the matter and we wait to hear its views. I do not want to pre-empt those discussions. Clearly, once they have taken place an announcement will be made.
	As I stated earlier, more than £600 million has been invested in new rolling stock in Kent in the past three years. In addition, there has been £93 million of investment in power supply, stations, depots and related infrastructure in Kent. All the slam-door trains have been removed and many trains' interiors have been upgraded. That does not come without a cost. We have to ask whether it is fair for the taxpayer to foot most of the bill. We have to try to strike a balance between how much the taxpayer pays and how much of the cost passengers should bear.
	In summary, it is probably worth putting on the record that this has been a good time for the railway. Significant improvements have taken place, with more than 1 billion passengers a year using it. Every week, £87 million is being invested and we have the fastest growing railway in Europe. In addition, the public performance measure of 85 per cent. that was set for next March has been passed on three occasions in the past three periods. We are not complacent—there is more work to be done. We must ensure that we reach and exceed our target but we have experienced an increase in the reliability of trains and the biggest single replacement of rolling stock and refurbishment in our time.
	I do not suggest that we should be complacent or that there is no room for improvement. However, important improvements and strides forward have been made. Performance is improving and passengers are receiving a better service. The current South East franchise has had its share of the benefits and the new integrated Kent franchise will experience more of them in the future.
	Question put and agreed to.
	Adjourned accordingly at twenty-four minutes to Eight o'clock.